(Mark One) |
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 1, 2016 |
OR |
/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______ |
Delaware | 36-2495346 | |
(State or other jurisdiction | (I.R.S. Employer | |
of incorporation or organization) | Identification Number) | |
251 O'Connor Ridge Blvd., Suite 300 | ||
Irving, Texas | 75038 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | X | Accelerated filer | Non-accelerated filer | Smaller reporting company | ||||||
(Do not check if a smaller reporting company) |
Page No. | ||
October 1, 2016 | January 2, 2016 | ||||||
ASSETS | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 148,585 | $ | 156,884 | |||
Restricted cash | 294 | 331 | |||||
Accounts receivable, net | 382,857 | 371,392 | |||||
Inventories | 359,095 | 344,583 | |||||
Prepaid expenses | 40,341 | 36,175 | |||||
Income taxes refundable | 13,222 | 11,963 | |||||
Other current assets | 18,609 | 10,460 | |||||
Total current assets | 963,003 | 931,788 | |||||
Property, plant and equipment, less accumulated depreciation of $802,172 at October 1, 2016 and $652,875 at January 2, 2016 | 1,535,185 | 1,508,167 | |||||
Intangible assets, less accumulated amortization of $286,316 at October 1, 2016 and $252,719 at January 2, 2016 | 747,522 | 782,349 | |||||
Goodwill | 1,256,376 | 1,233,102 | |||||
Investment in unconsolidated subsidiaries | 261,690 | 247,238 | |||||
Other assets | 35,912 | 41,623 | |||||
Deferred income taxes | 17,196 | 16,352 | |||||
$ | 4,816,884 | $ | 4,760,619 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 27,169 | $ | 45,166 | |||
Accounts payable, principally trade | 168,556 | 149,998 | |||||
Income taxes payable | 9,374 | 6,679 | |||||
Accrued expenses | 254,561 | 239,825 | |||||
Total current liabilities | 459,660 | 441,668 | |||||
Long-term debt, net of current portion | 1,818,361 | 1,885,851 | |||||
Other non-current liabilities | 89,517 | 97,809 | |||||
Deferred income taxes | 363,949 | 360,681 | |||||
Total liabilities | 2,731,487 | 2,786,009 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.01 par value; 250,000,000 shares authorized; 167,619,651 and 167,070,983 shares issued at October 1, 2016 and at January 2, 2016, respectively | 1,676 | 1,671 | |||||
Additional paid-in capital | 1,496,963 | 1,488,783 | |||||
Treasury stock, at cost; 3,028,857 and 2,335,607 shares at October 1, 2016 and at January 2, 2016, respectively | (40,909 | ) | (34,316 | ) | |||
Accumulated other comprehensive loss | (286,314 | ) | (335,918 | ) | |||
Retained earnings | 812,261 | 750,489 | |||||
Total Darling's stockholders’ equity | 1,983,677 | 1,870,709 | |||||
Noncontrolling interests | 101,720 | 103,901 | |||||
Total stockholders' equity | $ | 2,085,397 | $ | 1,974,610 | |||
$ | 4,816,884 | $ | 4,760,619 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | ||||||||||||
Net sales | $ | 853,856 | $ | 853,762 | $ | 2,510,838 | $ | 2,587,771 | |||||||
Costs and expenses: | |||||||||||||||
Cost of sales and operating expenses | 671,167 | 671,321 | 1,947,175 | 2,024,118 | |||||||||||
Selling, general and administrative expenses | 76,508 | 75,026 | 234,135 | 245,951 | |||||||||||
Acquisition and integration costs | — | 1,280 | 401 | 7,807 | |||||||||||
Depreciation and amortization | 70,653 | 67,327 | 212,440 | 199,970 | |||||||||||
Total costs and expenses | 818,328 | 814,954 | 2,394,151 | 2,477,846 | |||||||||||
Operating income | 35,528 | 38,808 | 116,687 | 109,925 | |||||||||||
Other expense: | |||||||||||||||
Interest expense | (23,867 | ) | (24,828 | ) | (71,748 | ) | (82,222 | ) | |||||||
Foreign currency gain/(loss) | 354 | (2,461 | ) | (2,241 | ) | (3,299 | ) | ||||||||
Other income/(expense), net | (2,007 | ) | 1,004 | (5,685 | ) | (704 | ) | ||||||||
Total other expense | (25,520 | ) | (26,285 | ) | (79,674 | ) | (86,225 | ) | |||||||
Equity in net income of unconsolidated subsidiaries | 18,138 | (12,021 | ) | 37,633 | (9,657 | ) | |||||||||
Income before income taxes | 28,146 | 502 | 74,646 | 14,043 | |||||||||||
Income tax expense/(benefit) | (744 | ) | 7,859 | 9,102 | 14,639 | ||||||||||
Net income/(loss) | 28,890 | (7,357 | ) | 65,544 | (596 | ) | |||||||||
Net income attributable to noncontrolling interests | (196 | ) | (1,730 | ) | (3,772 | ) | (5,302 | ) | |||||||
Net income/(loss) attributable to Darling | $ | 28,694 | $ | (9,087 | ) | $ | 61,772 | $ | (5,898 | ) | |||||
Basic income per share | $ | 0.17 | $ | (0.06 | ) | $ | 0.38 | $ | (0.04 | ) | |||||
Diluted income per share | $ | 0.17 | $ | (0.06 | ) | $ | 0.37 | $ | (0.04 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | ||||||||||||
Net income/(loss) | $ | 28,890 | $ | (7,357 | ) | $ | 65,544 | $ | (596 | ) | |||||
Other comprehensive income/(loss), net of tax: | |||||||||||||||
Foreign currency translation | (5,839 | ) | (43,295 | ) | 43,684 | (129,167 | ) | ||||||||
Pension adjustments | 727 | 780 | 2,104 | 2,327 | |||||||||||
Corn option derivative adjustments | 734 | 1,861 | 1,255 | 574 | |||||||||||
Total other comprehensive income/(loss), net of tax | (4,378 | ) | (40,654 | ) | 47,043 | (126,266 | ) | ||||||||
Total comprehensive income/(loss) | $ | 24,512 | $ | (48,011 | ) | $ | 112,587 | $ | (126,862 | ) | |||||
Comprehensive income/(loss) attributable to noncontrolling interests | (94 | ) | 39 | 1,211 | 7,929 | ||||||||||
Comprehensive income/(loss) attributable to Darling | $ | 24,606 | $ | (48,050 | ) | $ | 111,376 | $ | (134,791 | ) |
October 1, 2016 | October 3, 2015 | ||||||
Cash flows from operating activities: | |||||||
Net Income/(loss) | $ | 65,544 | $ | (596 | ) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 212,440 | 199,970 | |||||
Loss on disposal of property, plant, equipment and other assets | 873 | 627 | |||||
Gain on insurance proceeds from insurance settlements | (356 | ) | (561 | ) | |||
Deferred taxes | (5,223 | ) | 8,640 | ||||
Increase/(decrease) in long-term pension liability | (1,105 | ) | 678 | ||||
Stock-based compensation expense | 7,953 | 6,468 | |||||
Write-off deferred loan costs | 292 | 10,633 | |||||
Deferred loan cost amortization | 8,393 | 7,380 | |||||
Equity in net loss/(income) of unconsolidated subsidiaries | (37,633 | ) | 9,657 | ||||
Distributions of earnings from unconsolidated subsidiaries | 26,317 | 26,155 | |||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||
Accounts receivable | (3,058 | ) | 7,658 | ||||
Income taxes refundable/payable | 1,432 | 3,955 | |||||
Inventories and prepaid expenses | (11,368 | ) | 7,667 | ||||
Accounts payable and accrued expenses | 27,438 | (10,318 | ) | ||||
Other | (11,377 | ) | 18,641 | ||||
Net cash provided by operating activities | 280,562 | 296,654 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (168,224 | ) | (162,264 | ) | |||
Acquisitions, net of cash acquired | (8,511 | ) | — | ||||
Gross proceeds from disposal of property, plant and equipment and other assets | 4,492 | 2,473 | |||||
Proceeds from insurance settlement | 1,537 | 561 | |||||
Payments related to routes and other intangibles | — | (2,939 | ) | ||||
Net cash used by investing activities | (170,706 | ) | (162,169 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | 28,765 | 586,199 | |||||
Payments on long-term debt | (128,364 | ) | (595,872 | ) | |||
Borrowings from revolving credit facility | 83,000 | 78,244 | |||||
Payments on revolving credit facility | (93,028 | ) | (130,876 | ) | |||
Net cash overdraft financing | — | (1,261 | ) | ||||
Deferred loan costs | — | (17,119 | ) | ||||
Issuance of common stock | 143 | 171 | |||||
Repurchase of treasury stock | (5,000 | ) | (5,912 | ) | |||
Minimum withholding taxes paid on stock awards | (1,843 | ) | (4,838 | ) | |||
Distributions to noncontrolling interests | (885 | ) | (2,820 | ) | |||
Net cash used by financing activities | (117,212 | ) | (94,084 | ) | |||
Effect of exchange rate changes on cash | (943 | ) | (299 | ) | |||
Net increase/(decrease) in cash and cash equivalents | (8,299 | ) | 40,102 | ||||
Cash and cash equivalents at beginning of period | 156,884 | 108,784 | |||||
Cash and cash equivalents at end of period | $ | 148,585 | $ | 148,886 | |||
Supplemental disclosure of cash flow information: | |||||||
Accrued capital expenditures | $ | (3,302 | ) | $ | 940 | ||
Cash paid during the period for: | |||||||
Interest, net of capitalized interest | $ | 62,395 | $ | 57,764 | |||
Income taxes, net of refunds | $ | 14,018 | $ | 4,005 | |||
Non-cash financing activities | |||||||
Debt issued for assets | $ | 10 | $ | 2,521 | |||
Contribution of assets to unconsolidated subsidiary | $ | 2,674 | $ | — |
(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 | |||||||||||||||||||||
October 1, 2016 | October 3, 2015 | ||||||||||||||||||||
Income | Shares | Per Share | Loss | Shares | Per Share | ||||||||||||||||
Basic: | |||||||||||||||||||||
Net Income/(loss) attributable to Darling | $ | 28,694 | 164,653 | $ | 0.17 | $ | (9,087 | ) | 165,195 | $ | (0.06 | ) | |||||||||
Diluted: | |||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Add: Option shares in the money and dilutive effect of non-vested stock awards | 1,717 | — | |||||||||||||||||||
Less: Pro forma treasury shares | (934 | ) | — | ||||||||||||||||||
Diluted: | |||||||||||||||||||||
Net income/(loss) attributable to Darling | $ | 28,694 | 165,436 | $ | 0.17 | $ | (9,087 | ) | 165,195 | $ | (0.06 | ) |
Net Income per Common Share (in thousands, except per share data) | |||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||
October 1, 2016 | October 3, 2015 | ||||||||||||||||||||
Income | Shares | Per Share | Loss | Shares | Per Share | ||||||||||||||||
Basic: | |||||||||||||||||||||
Net Income/(loss) attributable to Darling | $ | 61,772 | 164,574 | $ | 0.38 | $ | (5,898 | ) | 165,086 | $ | (0.04 | ) | |||||||||
Diluted: | |||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||
Add: Option shares in the money and dilutive effect of non-vested stock awards | 1,222 | — | |||||||||||||||||||
Less: Pro forma treasury shares | (642 | ) | — | ||||||||||||||||||
Diluted: | |||||||||||||||||||||
Net income/(loss) attributable to Darling | $ | 61,772 | 165,154 | $ | 0.37 | $ | (5,898 | ) | 165,086 | $ | (0.04 | ) |
(3) | Inventories |
October 1, 2016 | January 2, 2016 | ||||||
Finished product | $ | 174,727 | $ | 164,428 | |||
Work in process | 92,677 | 84,474 | |||||
Raw material | 39,239 | 48,401 | |||||
Supplies and other | 52,452 | 47,280 | |||||
$ | 359,095 | $ | 344,583 |
(4) | Intangible Assets |
October 1, 2016 | January 2, 2016 | ||||||
Indefinite Lived Intangible Assets | |||||||
Trade names | $ | 53,097 | $ | 52,466 | |||
53,097 | 52,466 | ||||||
Finite Lived Intangible Assets: | |||||||
Routes | 385,118 | 390,888 | |||||
Permits | 501,672 | 494,754 | |||||
Non-compete agreements | 3,698 | 6,996 | |||||
Trade names | 76,200 | 75,825 | |||||
Royalty, consulting, land use rights and leasehold | 14,053 | 14,139 | |||||
980,741 | 982,602 | ||||||
Accumulated Amortization: | |||||||
Routes | (100,731 | ) | (99,819 | ) | |||
Permits | (162,817 | ) | (134,752 | ) | |||
Non-compete agreements | (1,672 | ) | (4,628 | ) | |||
Trade names | (18,922 | ) | (11,959 | ) | |||
Royalty, consulting, land use rights and leasehold | (2,174 | ) | (1,561 | ) | |||
(286,316 | ) | (252,719 | ) | ||||
Total Intangible assets, less accumulated amortization | $ | 747,522 | $ | 782,349 |
(5) | Goodwill |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Total | |||||||||
Balance at January 2, 2016 | ||||||||||||
Goodwill | $ | 812,797 | $ | 323,385 | $ | 112,834 | $ | 1,249,016 | ||||
Accumulated impairment losses | (15,914 | ) | — | — | (15,914 | ) | ||||||
796,883 | 323,385 | 112,834 | 1,233,102 | |||||||||
Goodwill acquired during year | 827 | — | 2 | 829 | ||||||||
Foreign currency translation | 13,618 | 5,166 | 3,661 | 22,445 | ||||||||
Balance at October 1, 2016 | ||||||||||||
Goodwill | 827,242 | 328,551 | 116,497 | 1,272,290 | ||||||||
Accumulated impairment losses | (15,914 | ) | — | — | (15,914 | ) | ||||||
$ | 811,328 | $ | 328,551 | $ | 116,497 | $ | 1,256,376 |
(6) | Investment in Unconsolidated Subsidiaries |
(in thousands) | September 30, 2016 | December 31, 2015 | |||||
Assets: | |||||||
Total current assets | $ | 207,392 | $ | 261,444 | |||
Property, plant and equipment, net | 354,285 | 356,230 | |||||
Other assets | 14,094 | 3,034 | |||||
Total assets | $ | 575,771 | $ | 620,708 | |||
Liabilities and members' equity: | |||||||
Total current portion of long term debt | $ | 17,023 | $ | 62,023 | |||
Total other current liabilities | 24,093 | 19,935 | |||||
Total long term debt | 58,009 | 86,819 | |||||
Total other long term liabilities | 408 | 380 | |||||
Total members' equity | 476,238 | 451,551 | |||||
Total liabilities and member's equity | $ | 575,771 | $ | 620,708 |
Three Months Ended | Nine Months Ended | |||||||||||||
(in thousands) | September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||
Revenues: | ||||||||||||||
Operating revenues | $ | 141,656 | $ | 107,160 | $ | 345,650 | $ | 380,048 | ||||||
Expenses: | ||||||||||||||
Total costs and expenses less depreciation, amortization and accretion expense | 96,569 | 123,779 | 244,643 | 376,157 | ||||||||||
Depreciation, amortization and accretion expense | 7,445 | 4,959 | 20,370 | 14,924 | ||||||||||
Total costs and expenses | 104,014 | 128,738 | 265,013 | 391,081 | ||||||||||
Operating income | 37,642 | (21,578 | ) | 80,637 | (11,033 | ) | ||||||||
Other income | 114 | 41 | 199 | 93 | ||||||||||
Interest and debt expense, net | (1,406 | ) | (3,122 | ) | (6,148 | ) | (10,629 | ) | ||||||
Net income/(loss) | $ | 36,350 | $ | (24,659 | ) | $ | 74,688 | $ | (21,569 | ) |
(7) | Debt |
October 1, 2016 | January 2, 2016 | ||||||
Amended Credit Agreement: | |||||||
Revolving Credit Facility ($9.4 million denominated in CAD at January 2, 2016) | $ | — | $ | 9,358 | |||
Term Loan A ($89.3 million and $97.1 million denominated in CAD at October 1, 2016 and January 2, 2016, respectively) | 187,590 | 277,181 | |||||
Less unamortized deferred loan costs | (861 | ) | (1,552 | ) | |||
Carrying value Term Loan A | 186,729 | 275,629 | |||||
Term Loan B | 585,000 | 589,500 | |||||
Less unamortized deferred loan costs | (6,670 | ) | (7,774 | ) | |||
Carrying value Term Loan B | 578,330 | 581,726 | |||||
5.375% Senior Notes due 2022 with effective interest of 5.72% | 500,000 | 500,000 | |||||
Less unamortized deferred loan costs | (7,994 | ) | (8,952 | ) | |||
Carrying value 5.375% Senior Notes due 2022 | 492,006 | 491,048 | |||||
4.75% Senior Notes due 2022 - Denominated in euro with effective interest of 5.10% | 574,740 | 560,912 | |||||
Less unamortized deferred loan costs - Denominated in euro | (9,847 | ) | (10,705 | ) | |||
Carrying value 4.75% Senior Notes due 2022 | 564,893 | 550,207 | |||||
Other Notes and Obligations | 23,572 | 23,049 | |||||
1,845,530 | 1,931,017 | ||||||
Less Current Maturities | 27,169 | 45,166 | |||||
$ | 1,818,361 | $ | 1,885,851 |
(8) | Income Taxes |
(9) | Other Comprehensive Income |
Three Months Ended | ||||||||||||||||||
Before-Tax | Tax (Expense) | Net-of-Tax | ||||||||||||||||
Amount | or Benefit | Amount | ||||||||||||||||
October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | |||||||||||||
Defined benefit pension plans | ||||||||||||||||||
Amortization of prior service cost/(benefit) | $ | 8 | $ | (21 | ) | $ | (2 | ) | $ | 9 | $ | 6 | $ | (12 | ) | |||
Amortization of actuarial loss | 1,168 | 1,286 | (447 | ) | (494 | ) | 721 | 792 | ||||||||||
Total defined benefit pension plans | 1,176 | 1,265 | (449 | ) | (485 | ) | 727 | 780 | ||||||||||
Corn option derivatives | ||||||||||||||||||
Loss/(gain) reclassified to net income | (861 | ) | (211 | ) | 334 | 82 | (527 | ) | (129 | ) | ||||||||
Gain/(loss) activity recognized in other comprehensive income (loss) | 2,060 | 3,254 | (799 | ) | (1,264 | ) | 1,261 | 1,990 | ||||||||||
Total corn option derivatives | 1,199 | 3,043 | (465 | ) | (1,182 | ) | 734 | 1,861 | ||||||||||
Foreign currency translation | (5,839 | ) | (43,295 | ) | — | — | (5,839 | ) | (43,295 | ) | ||||||||
Other comprehensive income (loss) | $ | (3,464 | ) | $ | (38,987 | ) | $ | (914 | ) | $ | (1,667 | ) | $ | (4,378 | ) | $ | (40,654 | ) |
Nine Months Ended | ||||||||||||||||||
Before-Tax | Tax (Expense) | Net-of-Tax | ||||||||||||||||
Amount | or Benefit | Amount | ||||||||||||||||
October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | |||||||||||||
Defined benefit pension plans | ||||||||||||||||||
Amortization of prior service cost/(benefit) | $ | 22 | $ | (61 | ) | $ | (7 | ) | $ | 29 | $ | 15 | $ | (32 | ) | |||
Amortization of actuarial loss | 3,502 | 3,855 | (1,338 | ) | (1,496 | ) | 2,164 | 2,359 | ||||||||||
Amortization of settlement | (123 | ) | — | 48 | — | (75 | ) | — | ||||||||||
Total defined benefit pension plans | 3,401 | 3,794 | (1,297 | ) | (1,467 | ) | 2,104 | 2,327 | ||||||||||
Corn option derivatives | ||||||||||||||||||
Loss/(gain) reclassified to net income | (3,204 | ) | (792 | ) | 1,243 | 307 | (1,961 | ) | (485 | ) | ||||||||
Gain/(loss) activity recognized in other comprehensive income (loss) | 5,255 | 1,731 | (2,039 | ) | (672 | ) | 3,216 | 1,059 | ||||||||||
Total corn option derivatives | 2,051 | 939 | (796 | ) | (365 | ) | 1,255 | 574 | ||||||||||
Foreign currency translation | 43,684 | (129,167 | ) | — | — | 43,684 | (129,167 | ) | ||||||||||
Other Comprehensive income (loss) | $ | 49,136 | $ | (124,434 | ) | $ | (2,093 | ) | $ | (1,832 | ) | $ | 47,043 | $ | (126,266 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||
October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | Statement of Operations Classification | |||||||||
Derivative instruments | |||||||||||||
Corn option derivatives | $ | 861 | $ | 211 | $ | 3,204 | $ | 792 | Cost of sales and operating expenses | ||||
861 | 211 | 3,204 | 792 | Total before tax | |||||||||
(334 | ) | (82 | ) | (1,243 | ) | (307 | ) | Income taxes | |||||
527 | 129 | 1,961 | 485 | Net of tax | |||||||||
Defined benefit pension plans | |||||||||||||
Amortization of prior service (cost)/benefit | $ | (8 | ) | $ | 21 | $ | (22 | ) | $ | 61 | (a) | ||
Amortization of actuarial loss | (1,168 | ) | (1,286 | ) | (3,502 | ) | (3,855 | ) | (a) | ||||
Amortization of settlement | — | — | 123 | — | (a) | ||||||||
(1,176 | ) | (1,265 | ) | (3,401 | ) | (3,794 | ) | Total before tax | |||||
449 | 485 | 1,297 | 1,467 | Income taxes | |||||||||
(727 | ) | (780 | ) | (2,104 | ) | (2,327 | ) | Net of tax | |||||
Total reclassifications | $ | (200 | ) | $ | (651 | ) | $ | (143 | ) | $ | (1,842 | ) | Net of tax |
(a) | These items are included in the computation of net periodic pension cost. See Note 11 Employee Benefit Plans for additional information. |
Nine Months Ended October 1, 2016 | |||||||||||||
Foreign Currency | Derivative | Defined Benefit | |||||||||||
Translation | Instruments | Pension Plans | Total | ||||||||||
Accumulated Other Comprehensive Income (loss) January 2, 2016, attributable to Darling, net of tax | $ | (305,213 | ) | $ | 1,843 | $ | (32,548 | ) | $ | (335,918 | ) | ||
Other comprehensive gain before reclassifications | 43,684 | 3,216 | — | 46,900 | |||||||||
Amounts reclassified from accumulated other comprehensive income/(loss) | — | (1,961 | ) | 2,104 | 143 | ||||||||
Net current-period other comprehensive income | 43,684 | 1,255 | 2,104 | 47,043 | |||||||||
Noncontrolling interest | (2,561 | ) | — | — | (2,561 | ) | |||||||
Accumulated Other Comprehensive Income (loss) October 1, 2016, attributable to Darling, net of tax | (258,968 | ) | $ | 3,098 | $ | (30,444 | ) | $ | (286,314 | ) |
Pension Benefits | Pension Benefits | ||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | ||||||||||
Service cost | $ | 599 | $ | 1,633 | $ | 1,921 | $ | 4,978 | |||||
Interest cost | 1,702 | 2,622 | 5,217 | 7,907 | |||||||||
Expected return on plan assets | (1,886 | ) | (3,053 | ) | (5,661 | ) | (9,169 | ) | |||||
Amortization of prior service cost/(benefit) | 8 | (21 | ) | 22 | (61 | ) | |||||||
Amortization of net loss | 1,168 | 1,286 | 3,502 | 3,855 | |||||||||
Curtailment gain | (62 | ) | — | (1,285 | ) | — | |||||||
Settlement gain | — | — | (123 | ) | — | ||||||||
Net pension cost | $ | 1,529 | $ | 2,467 | $ | 3,593 | $ | 7,510 |
(12) | Derivatives |
Functional Currency | Contract Currency | |||||
Type | Amount | Type | Amount | |||
Brazilian real | 28,514 | Euro | 6,850 | |||
Brazilian real | 73,423 | U.S. dollar | 20,125 | |||
Euro | 188,728 | U.S. dollar | 211,779 | |||
Euro | 9,825 | Polish zloty | 43,000 | |||
Euro | 3,395 | Japanese yen | 385,211 | |||
Euro | 33,928 | Chinese renminbi | 254,639 | |||
Euro | 11,126 | Australian dollar | 16,400 | |||
Euro | 117 | British pound | 100 | |||
Polish zloty | 19,027 | Euro | 4,379 | |||
Japanese yen | 25,835 | U.S. dollar | 237 |
Derivatives Designated | Balance Sheet | Asset Derivatives Fair Value | |||||
as Hedges | Location | October 1, 2016 | January 2, 2016 | ||||
Corn options | Other current assets | $ | 5,719 | $ | 3,215 | ||
Total asset derivatives designated as hedges | $ | 5,719 | $ | 3,215 | |||
Derivatives Not Designated as Hedges | |||||||
Foreign currency contracts | Other current assets | $ | 3,457 | $ | 644 | ||
Corn options and futures | Other current assets | 710 | 599 | ||||
Total asset derivatives not designated as hedges | $ | 4,167 | $ | 1,243 | |||
Total asset derivatives | $ | 9,886 | $ | 4,458 |
Balance Sheet | Liability Derivatives Fair Value | ||||||
Location | October 1, 2016 | January 2, 2016 | |||||
Derivatives Not Designated as Hedges | |||||||
Foreign currency contracts | Accrued expenses | $ | 712 | $ | 4,435 | ||
Heating oil swaps and options | Accrued expenses | 223 | — | ||||
Corn options and futures | Accrued expenses | 66 | 2 | ||||
Total liability derivatives not designated as hedges | $ | 1,001 | $ | 4,437 | |||
Total liability derivatives | $ | 1,001 | $ | 4,437 |
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) | |||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Corn options | $ | 2,060 | $ | 3,254 | $ | 861 | $ | 211 | $ | 323 | $ | 1,206 | ||||||
Total | $ | 2,060 | $ | 3,254 | $ | 861 | $ | 211 | $ | 323 | $ | 1,206 |
(a) | Amount recognized in accumulated OCI (effective portion) is reported as accumulated other comprehensive income/(loss) of approximately $2.1 million and $3.3 million recorded net of taxes of approximately $(0.8) million and $(1.3) million as of October 1, 2016 and October 3, 2015, respectively. |
(b) | Gains and (losses) reclassified from accumulated OCI into income (effective portion) for corn options 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 are 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 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) | |||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Corn options | $ | 5,255 | $ | 1,731 | $ | 3,204 | $ | 792 | $ | 537 | $ | 479 | ||||||
Total | $ | 5,255 | $ | 1,731 | $ | 3,204 | $ | 792 | $ | 537 | $ | 479 |
(a) | Amount recognized in accumulated OCI (effective portion) is reported as accumulated other comprehensive income/(loss) of approximately $5.3 million and $1.7 million recorded net of taxes of approximately $(2.0) million and $(0.7) million as of October 1, 2016 and October 3, 2015, respectively. |
(b) | Gains and (losses) reclassified from accumulated OCI into income (effective portion) for corn options 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 are included in other income/ (expense), net in the Company’s consolidated statements of operations. |
Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
Derivatives not designated as hedging instruments | Location | October 1, 2016 | October 3, 2015 | October 1, 2016 | October 3, 2015 | ||||||||||
Foreign Exchange | Foreign currency loss/(gain) | $ | 1,871 | $ | 2,003 | $ | 5,954 | $ | (19,404 | ) | |||||
Foreign Exchange | Selling, general and administrative expense | (786 | ) | 4,112 | (7,565 | ) | 7,103 | ||||||||
Corn options and futures | Net sales | 267 | (95 | ) | 612 | (25 | ) | ||||||||
Corn options and futures | Cost of sales and operating expenses | (997 | ) | (1,516 | ) | (1,610 | ) | (1,138 | ) | ||||||
Heating Oil swaps and options | Net sales | 323 | — | 476 | — | ||||||||||
Heating Oil swaps and options | Cost of sales and operating expenses | — | 11 | — | 141 | ||||||||||
Soybean Meal | Net sales | — | — | 7 | — | ||||||||||
Total | $ | 678 | $ | 4,515 | $ | (2,126 | ) | $ | (13,323 | ) |
Fair Value Measurements at October 1, 2016 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 | $ | 9,886 | $ | — | $ | 9,886 | $ | — | ||||
Total Assets | $ | 9,886 | $ | — | $ | 9,886 | $ | — | ||||
Liabilities: | ||||||||||||
Derivative instruments | $ | 1,001 | $ | — | $ | 1,001 | $ | — | ||||
5.375% Senior notes | 521,900 | — | 521,900 | — | ||||||||
4.75% Senior notes | 586,235 | — | 586,235 | — | ||||||||
Term loan A | 188,059 | — | 188,059 | — | ||||||||
Term loan B | 589,388 | — | 589,388 | — | ||||||||
Total Liabilities | $ | 1,886,583 | $ | — | $ | 1,886,583 | $ | — |
Fair Value Measurements at January 2, 2016 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 | $ | 4,458 | $ | — | $ | 4,458 | $ | — | ||||
Total Assets | $ | 4,458 | $ | — | $ | 4,458 | $ | — | ||||
Liabilities: | ||||||||||||
Derivative instruments | $ | 4,437 | $ | — | $ | 4,437 | $ | — | ||||
5.375% Senior notes | 495,000 | — | 495,000 | — | ||||||||
4.75% Senior notes | 541,280 | — | 541,280 | — | ||||||||
Term loan A | 277,874 | — | 277,874 | — | ||||||||
Term loan B | 577,710 | — | 577,710 | — | ||||||||
Revolver debt | 9,218 | — | 9,218 | — | ||||||||
Total Liabilities | $ | 1,905,519 | $ | — | $ | 1,905,519 | $ | — |
(14) | Contingencies |
(15) | Business Segments |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||||||||
Three Months Ended October 1, 2016 | |||||||||||||||
Net Sales | $ | 531,413 | $ | 261,997 | $ | 60,446 | $ | — | $ | 853,856 | |||||
Cost of sales and operating expenses | 413,602 | 211,318 | 46,247 | — | 671,167 | ||||||||||
Gross Margin | 117,811 | 50,679 | 14,199 | — | 182,689 | ||||||||||
Selling, general and administrative expense | 38,943 | 25,352 | 1,332 | 10,881 | 76,508 | ||||||||||
Acquisition and integration costs | — | — | — | — | — | ||||||||||
Depreciation and amortization | 43,614 | 17,383 | 6,896 | 2,760 | 70,653 | ||||||||||
Segment operating income/(loss) | 35,254 | 7,944 | 5,971 | (13,641 | ) | 35,528 | |||||||||
Equity in net income/(loss) of unconsolidated subsidiaries | (36 | ) | — | 18,174 | — | 18,138 | |||||||||
Segment income/(loss) | 35,218 | 7,944 | 24,145 | (13,641 | ) | 53,666 | |||||||||
Total other expense | (25,520 | ) | |||||||||||||
Income before income taxes | $ | 28,146 |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||||||||
Three Months Ended October 3, 2015 | |||||||||||||||
Net Sales | $ | 525,213 | $ | 269,230 | $ | 59,319 | $ | — | $ | 853,762 | |||||
Cost of sales and operating expenses | 409,030 | 214,406 | 47,885 | — | 671,321 | ||||||||||
Gross Margin | 116,183 | 54,824 | 11,434 | — | 182,441 | ||||||||||
Selling, general and administrative expense | 39,718 | 26,118 | 4,459 | 4,731 | 75,026 | ||||||||||
Acquisition and integration costs | — | — | — | 1,280 | 1,280 | ||||||||||
Depreciation and amortization | 40,846 | 17,144 | 6,729 | 2,608 | 67,327 | ||||||||||
Segment operating income/(loss) | 35,619 | 11,562 | 246 | (8,619 | ) | 38,808 | |||||||||
Equity in net income/(loss) of unconsolidated subsidiaries | 309 | — | (12,330 | ) | — | (12,021 | ) | ||||||||
Segment income/(loss) | 35,928 | 11,562 | (12,084 | ) | (8,619 | ) | 26,787 | ||||||||
Total other expense | (26,285 | ) | |||||||||||||
Income before income taxes | $ | 502 |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||||||||
Nine Months Ended October 1, 2016 | |||||||||||||||
Net Sales | $ | 1,550,539 | $ | 782,014 | $ | 178,285 | $ | — | $ | 2,510,838 | |||||
Cost of sales and operating expenses | 1,202,404 | 611,151 | 133,620 | — | 1,947,175 | ||||||||||
Gross Margin | 348,135 | 170,863 | 44,665 | — | 563,663 | ||||||||||
Selling, general and administrative expense | 127,513 | 69,566 | 4,986 | 32,070 | 234,135 | ||||||||||
Acquisition and integration costs | — | — | — | 401 | 401 | ||||||||||
Depreciation and amortization | 130,110 | 51,823 | 20,999 | 9,508 | 212,440 | ||||||||||
Segment operating income/(loss) | 90,512 | 49,474 | 18,680 | (41,979 | ) | 116,687 | |||||||||
Equity in net income of unconsolidated subsidiaries | 290 | — | 37,343 | — | 37,633 | ||||||||||
Segment income/(loss) | 90,802 | 49,474 | 56,023 | (41,979 | ) | 154,320 | |||||||||
Total other expense | (79,674 | ) | |||||||||||||
Income before income taxes | $ | 74,646 | |||||||||||||
Segment assets at October 1, 2016 | $ | 2,493,164 | $ | 1,472,079 | $ | 641,823 | $ | 209,818 | $ | 4,816,884 |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||||||||
Nine Months Ended October 3, 2015 | |||||||||||||||
Net Sales | $ | 1,602,141 | $ | 822,741 | $ | 162,889 | $ | — | $ | 2,587,771 | |||||
Cost of sales and operating expenses | 1,237,936 | 654,233 | 131,949 | — | 2,024,118 | ||||||||||
Gross Margin | 364,205 | 168,508 | 30,940 | — | 563,653 | ||||||||||
Selling, general and administrative expense | 136,397 | 79,461 | 6,204 | 23,889 | 245,951 | ||||||||||
Acquisition and integration costs | — | — | — | 7,807 | 7,807 | ||||||||||
Depreciation and amortization | 121,386 | 51,126 | 19,959 | 7,499 | 199,970 | ||||||||||
Segment operating income/(loss) | 106,422 | 37,921 | 4,777 | (39,195 | ) | 109,925 | |||||||||
Equity in net income/(loss) of unconsolidated subsidiaries | 1,128 | — | (10,785 | ) | — | (9,657 | ) | ||||||||
Segment income/(loss) | 107,550 | 37,921 | (6,008 | ) | (39,195 | ) | 100,268 | ||||||||
Total other expense | (86,225 | ) | |||||||||||||
Income before income taxes | $ | 14,043 | |||||||||||||
Segment assets at January 2, 2016 | $ | 2,438,869 | $ | 1,448,014 | $ | 631,968 | $ | 241,768 | $ | 4,760,619 |
(16) | Related Party Transactions |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents | $ | 1,377 | $ | 1,742 | $ | 145,466 | $ | — | $ | 148,585 | |||||
Restricted cash | 103 | — | 191 | — | 294 | ||||||||||
Accounts receivable | 33,178 | 91,987 | 354,447 | (96,755 | ) | 382,857 | |||||||||
Inventories | 21,154 | 97,957 | 239,984 | — | 359,095 | ||||||||||
Income taxes refundable | 8,933 | — | 4,289 | — | 13,222 | ||||||||||
Prepaid expenses | 14,365 | 2,623 | 23,353 | — | 40,341 | ||||||||||
Other current assets | 7,481 | 2,038 | 14,235 | (5,145 | ) | 18,609 | |||||||||
Total current assets | 86,591 | 196,347 | 781,965 | (101,900 | ) | 963,003 | |||||||||
Investment in subsidiaries | 4,230,796 | 1,141,644 | 803,728 | (6,176,168 | ) | — | |||||||||
Property, plant and equipment, net | 223,556 | 495,111 | 816,518 | — | 1,535,185 | ||||||||||
Intangible assets, net | 14,732 | 300,222 | 432,568 | — | 747,522 | ||||||||||
Goodwill | 21,860 | 549,690 | 684,826 | — | 1,256,376 | ||||||||||
Investment in unconsolidated subsidiaries | 1,861 | — | 259,829 | — | 261,690 | ||||||||||
Other assets | 30,210 | 446,233 | 306,849 | (747,380 | ) | 35,912 | |||||||||
Deferred taxes | — | — | 17,196 | — | 17,196 | ||||||||||
$ | 4,609,606 | $ | 3,129,247 | $ | 4,103,479 | $ | (7,025,448 | ) | $ | 4,816,884 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
Current portion of long-term debt | $ | 5,729 | $ | — | $ | 26,585 | $ | (5,145 | ) | $ | 27,169 | ||||
Accounts payable | 39,588 | 82,352 | 120,465 | (73,849 | ) | 168,556 | |||||||||
Income taxes payable | (383 | ) | 373 | 9,384 | — | 9,374 | |||||||||
Accrued expenses | 79,242 | 31,024 | 167,200 | (22,905 | ) | 254,561 | |||||||||
Total current liabilities | 124,176 | 113,749 | 323,634 | (101,899 | ) | 459,660 | |||||||||
Long-term debt, net of current portion | 1,163,790 | — | 1,401,951 | (747,380 | ) | 1,818,361 | |||||||||
Other noncurrent liabilities | 54,228 | — | 35,289 | — | 89,517 | ||||||||||
Deferred income taxes | 148,518 | — | 215,431 | — | 363,949 | ||||||||||
Total liabilities | 1,490,712 | 113,749 | 1,976,305 | (849,279 | ) | 2,731,487 | |||||||||
Total stockholders’ equity | 3,118,894 | 3,015,498 | 2,127,174 | (6,176,169 | ) | 2,085,397 | |||||||||
$ | 4,609,606 | $ | 3,129,247 | $ | 4,103,479 | $ | (7,025,448 | ) | $ | 4,816,884 |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
ASSETS | |||||||||||||||
Cash and cash equivalents | $ | 3,443 | $ | 3,993 | $ | 149,448 | $ | — | $ | 156,884 | |||||
Restricted cash | 102 | — | 229 | — | 331 | ||||||||||
Accounts receivable | 184,472 | 81,644 | 310,932 | (205,656 | ) | 371,392 | |||||||||
Inventories | 13,564 | 89,078 | 241,941 | — | 344,583 | ||||||||||
Income taxes refundable | 7,695 | — | 4,268 | — | 11,963 | ||||||||||
Prepaid expenses | 13,322 | 2,262 | 20,591 | — | 36,175 | ||||||||||
Other current assets | 5,273 | 24 | 22,852 | (17,689 | ) | 10,460 | |||||||||
Total current assets | 227,871 | 177,001 | 750,261 | (223,345 | ) | 931,788 | |||||||||
Investment in subsidiaries | 4,072,855 | 1,141,644 | 837,604 | (6,052,103 | ) | — | |||||||||
Property, plant and equipment, net | 224,208 | 477,446 | 806,513 | — | 1,508,167 | ||||||||||
Intangible assets, net | 17,794 | 326,231 | 438,324 | — | 782,349 | ||||||||||
Goodwill | 21,860 | 549,690 | 661,552 | — | 1,233,102 | ||||||||||
Investment in unconsolidated subsidiary | — | — | 247,238 | — | 247,238 | ||||||||||
Other assets | 36,488 | 499,764 | 314,893 | (809,522 | ) | 41,623 | |||||||||
Deferred income taxes | — | — | 16,352 | — | 16,352 | ||||||||||
$ | 4,601,076 | $ | 3,171,776 | $ | 4,072,737 | $ | (7,084,970 | ) | $ | 4,760,619 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||
Current portion of long-term debt | $ | 20,328 | $ | — | $ | 42,527 | $ | (17,689 | ) | $ | 45,166 | ||||
Accounts payable | 6,981 | 210,926 | 122,136 | (190,045 | ) | 149,998 | |||||||||
Income taxes payable | (383 | ) | 373 | 6,689 | — | 6,679 | |||||||||
Accrued expenses | 82,854 | 29,037 | 143,547 | (15,613 | ) | 239,825 | |||||||||
Total current liabilities | 109,780 | 240,336 | 314,899 | (223,347 | ) | 441,668 | |||||||||
Long-term debt, net of current portion | 1,234,002 | — | 1,461,371 | (809,522 | ) | 1,885,851 | |||||||||
Other noncurrent liabilities | 57,578 | 1,999 | 38,232 | — | 97,809 | ||||||||||
Deferred income taxes | 147,416 | — | 213,265 | — | 360,681 | ||||||||||
Total liabilities | 1,548,776 | 242,335 | 2,027,767 | (1,032,869 | ) | 2,786,009 | |||||||||
Total stockholders’ equity | 3,052,300 | 2,929,441 | 2,044,970 | (6,052,101 | ) | 1,974,610 | |||||||||
$ | 4,601,076 | $ | 3,171,776 | $ | 4,072,737 | $ | (7,084,970 | ) | $ | 4,760,619 |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net sales | $ | 130,063 | $ | 347,384 | $ | 433,523 | $ | (57,114 | ) | $ | 853,856 | ||||
Cost and expenses: | |||||||||||||||
Cost of sales and operating expenses | 99,705 | 286,919 | 341,657 | (57,114 | ) | 671,167 | |||||||||
Selling, general and administrative expenses | 29,987 | 13,421 | 33,100 | — | 76,508 | ||||||||||
Acquisition and integration costs | — | — | — | — | — | ||||||||||
Depreciation and amortization | 9,622 | 24,813 | 36,218 | — | 70,653 | ||||||||||
Total costs and expenses | 139,314 | 325,153 | 410,975 | (57,114 | ) | 818,328 | |||||||||
Operating income/(loss) | (9,251 | ) | 22,231 | 22,548 | — | 35,528 | |||||||||
Interest expense | (15,382 | ) | 4,437 | (12,922 | ) | — | (23,867 | ) | |||||||
Foreign currency gains/(losses) | (11 | ) | (152 | ) | 517 | — | 354 | ||||||||
Other expense, net | (3,439 | ) | 258 | 1,174 | — | (2,007 | ) | ||||||||
Equity in net income/(loss) of unconsolidated subsidiaries | (362 | ) | — | 18,500 | — | 18,138 | |||||||||
Earnings in investments in subsidiaries | 60,952 | — | — | (60,952 | ) | — | |||||||||
Income/(loss) before taxes | 32,507 | 26,774 | 29,817 | (60,952 | ) | 28,146 | |||||||||
Income taxes (benefit) | 3,813 | (3,140 | ) | (1,417 | ) | — | (744 | ) | |||||||
Net income attributable to noncontrolling interests | — | — | (196 | ) | — | (196 | ) | ||||||||
Net income/(loss) attributable to Darling | $ | 28,694 | $ | 29,914 | $ | 31,038 | $ | (60,952 | ) | $ | 28,694 |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net sales | $ | 367,811 | $ | 994,028 | $ | 1,297,393 | $ | (148,394 | ) | $ | 2,510,838 | ||||
Cost and expenses: | |||||||||||||||
Cost of sales and operating expenses | 288,976 | 796,001 | 1,010,592 | (148,394 | ) | 1,947,175 | |||||||||
Selling, general and administrative expenses | 100,449 | 38,018 | 95,668 | — | 234,135 | ||||||||||
Acquisition and integration costs | — | — | 401 | — | 401 | ||||||||||
Depreciation and amortization | 30,459 | 75,723 | 106,258 | — | 212,440 | ||||||||||
Total costs and expenses | 419,884 | 909,742 | 1,212,919 | (148,394 | ) | 2,394,151 | |||||||||
Operating income/(loss) | (52,073 | ) | 84,286 | 84,474 | — | 116,687 | |||||||||
Interest expense | (46,242 | ) | 13,391 | (38,897 | ) | — | (71,748 | ) | |||||||
Foreign currency gains/(losses) | 32 | 36 | (2,309 | ) | — | (2,241 | ) | ||||||||
Other expense, net | (10,429 | ) | 380 | 4,364 | — | (5,685 | ) | ||||||||
Equity in net income/(loss) of unconsolidated subsidiaries | (814 | ) | — | 38,447 | — | 37,633 | |||||||||
Earnings in investments in subsidiaries | 157,943 | — | — | (157,943 | ) | — | |||||||||
Income/(loss) before taxes | 48,417 | 98,093 | 86,079 | (157,943 | ) | 74,646 | |||||||||
Income taxes (benefit) | (13,355 | ) | 11,961 | 10,496 | — | 9,102 | |||||||||
Net income attributable to noncontrolling interests | — | — | (3,772 | ) | — | (3,772 | ) | ||||||||
Net income/(loss) attributable to Darling | $ | 61,772 | $ | 86,132 | $ | 71,811 | $ | (157,943 | ) | $ | 61,772 |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net sales | $ | 122,670 | $ | 341,936 | $ | 437,905 | $ | (48,749 | ) | $ | 853,762 | ||||
Cost and expenses: | |||||||||||||||
Cost of sales and operating expenses | 92,188 | 282,218 | 345,664 | (48,749 | ) | 671,321 | |||||||||
Selling, general and administrative expenses | 23,651 | 14,285 | 37,090 | — | 75,026 | ||||||||||
Acquisition and integration costs | 764 | — | 516 | — | 1,280 | ||||||||||
Depreciation and amortization | 8,074 | 24,409 | 34,844 | — | 67,327 | ||||||||||
Total costs and expenses | 124,677 | 320,912 | 418,114 | (48,749 | ) | 814,954 | |||||||||
Operating income/(loss) | (2,007 | ) | 21,024 | 19,791 | — | 38,808 | |||||||||
Interest expense | (15,339 | ) | 4,635 | (14,124 | ) | — | (24,828 | ) | |||||||
Foreign currency gains/(losses) | 1 | (561 | ) | (1,901 | ) | — | (2,461 | ) | |||||||
Other expense, net | (1,282 | ) | 1,488 | 798 | — | 1,004 | |||||||||
Equity in net loss of unconsolidated subsidiaries | — | — | (12,021 | ) | — | (12,021 | ) | ||||||||
Earnings in investments in subsidiaries | (45,361 | ) | — | — | 45,361 | — | |||||||||
Income/(loss) before taxes | (63,988 | ) | 26,586 | (7,457 | ) | 45,361 | 502 | ||||||||
Income taxes (benefit) | (54,901 | ) | 67,707 | (4,947 | ) | — | 7,859 | ||||||||
Net income attributable to noncontrolling interests | — | — | (1,730 | ) | — | (1,730 | ) | ||||||||
Net income/(loss) attributable to Darling | $ | (9,087 | ) | $ | (41,121 | ) | $ | (4,240 | ) | $ | 45,361 | $ | (9,087 | ) |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net sales | $ | 369,734 | $ | 1,045,673 | $ | 1,323,884 | $ | (151,520 | ) | $ | 2,587,771 | ||||
Cost and expenses: | |||||||||||||||
Cost of sales and operating expenses | 285,125 | 845,594 | 1,044,919 | (151,520 | ) | 2,024,118 | |||||||||
Selling, general and administrative expenses | 91,905 | 42,322 | 111,724 | — | 245,951 | ||||||||||
Acquisition costs | 3,340 | — | 4,467 | — | 7,807 | ||||||||||
Depreciation and amortization | 24,228 | 71,841 | 103,901 | — | 199,970 | ||||||||||
Total costs and expenses | 404,598 | 959,757 | 1,265,011 | (151,520 | ) | 2,477,846 | |||||||||
Operating income/(loss) | (34,864 | ) | 85,916 | 58,873 | — | 109,925 | |||||||||
Interest expense | (45,568 | ) | 14,334 | (50,988 | ) | — | (82,222 | ) | |||||||
Foreign currency gains/(losses) | (8 | ) | (958 | ) | (2,333 | ) | — | (3,299 | ) | ||||||
Other expense, net | (3,687 | ) | 1,117 | 1,866 | — | (704 | ) | ||||||||
Equity in net loss of unconsolidated subsidiaries | — | — | (9,657 | ) | — | (9,657 | ) | ||||||||
Earnings in investments in subsidiaries | (9,468 | ) | — | — | 9,468 | — | |||||||||
Income/(loss) before taxes | (93,595 | ) | 100,409 | (2,239 | ) | 9,468 | 14,043 | ||||||||
Income taxes (benefit) | (87,697 | ) | 104,670 | (2,334 | ) | — | 14,639 | ||||||||
Net income attributable to noncontrolling interests | — | — | (5,302 | ) | — | (5,302 | ) | ||||||||
Net income/(loss) attributable to Darling | $ | (5,898 | ) | $ | (4,261 | ) | $ | (5,207 | ) | $ | 9,468 | $ | (5,898 | ) |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net income/(loss) | $ | 28,890 | $ | 29,914 | $ | 31,038 | $ | (60,952 | ) | $ | 28,890 | ||||
Other comprehensive income/(loss), net of tax: | |||||||||||||||
Foreign currency translation | — | — | (5,839 | ) | — | (5,839 | ) | ||||||||
Pension adjustments | 659 | — | 68 | — | 727 | ||||||||||
Corn option derivative adjustments | 734 | — | — | — | 734 | ||||||||||
Total other comprehensive income/(loss), net of tax | 1,393 | — | (5,771 | ) | — | (4,378 | ) | ||||||||
Total comprehensive income/(loss) | 30,283 | 29,914 | 25,267 | (60,952 | ) | 24,512 | |||||||||
Total comprehensive income attributable to noncontrolling interest | — | — | (94 | ) | — | (94 | ) | ||||||||
Total comprehensive income/(loss) attributable to Darling | $ | 30,283 | $ | 29,914 | $ | 25,361 | $ | (60,952 | ) | $ | 24,606 |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net income/(loss) | $ | 65,544 | $ | 86,132 | $ | 71,811 | $ | (157,943 | ) | $ | 65,544 | ||||
Other comprehensive income/ (loss), net of tax: | |||||||||||||||
Foreign currency translation | — | — | 43,684 | — | 43,684 | ||||||||||
Pension adjustments | 1,975 | (75 | ) | 204 | — | 2,104 | |||||||||
Corn option derivative adjustments | 1,255 | — | — | — | 1,255 | ||||||||||
Total other comprehensive income, net of tax | 3,230 | (75 | ) | 43,888 | — | 47,043 | |||||||||
Total comprehensive income/(loss) | 68,774 | 86,057 | 115,699 | (157,943 | ) | 112,587 | |||||||||
Total comprehensive income attributable to noncontrolling interest | — | — | 1,211 | — | 1,211 | ||||||||||
Total comprehensive income/(loss) attributable to Darling | $ | 68,774 | $ | 86,057 | $ | 114,488 | $ | (157,943 | ) | $ | 111,376 |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net income/(loss) | $ | (7,357 | ) | $ | (41,121 | ) | $ | (4,240 | ) | $ | 45,361 | $ | (7,357 | ) | |
Other comprehensive income/(loss), net of tax: | |||||||||||||||
Foreign currency translation | — | — | (43,295 | ) | — | (43,295 | ) | ||||||||
Pension adjustments | 730 | — | 50 | — | 780 | ||||||||||
Corn option derivative adjustments | 1,861 | — | — | — | 1,861 | ||||||||||
Total other comprehensive income/(loss), net of tax | 2,591 | — | (43,245 | ) | — | (40,654 | ) | ||||||||
Total comprehensive income/(loss) | (4,766 | ) | (41,121 | ) | (47,485 | ) | 45,361 | (48,011 | ) | ||||||
Total comprehensive income attributable to noncontrolling interest | — | — | 39 | — | 39 | ||||||||||
Total comprehensive income/(loss) attributable to Darling | $ | (4,766 | ) | $ | (41,121 | ) | $ | (47,524 | ) | $ | 45,361 | $ | (48,050 | ) |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Net income/(loss) | $ | (596 | ) | $ | (4,261 | ) | $ | (5,207 | ) | $ | 9,468 | $ | (596 | ) | |
Other comprehensive income/(loss), net of tax: | |||||||||||||||
Foreign currency translation | — | — | (129,167 | ) | — | (129,167 | ) | ||||||||
Pension adjustments | 2,188 | — | 139 | — | 2,327 | ||||||||||
Corn option derivative adjustments | 574 | — | — | — | 574 | ||||||||||
Total other comprehensive income, net of tax | 2,762 | — | (129,028 | ) | — | (126,266 | ) | ||||||||
Total comprehensive income/(loss) | 2,166 | (4,261 | ) | (134,235 | ) | 9,468 | (126,862 | ) | |||||||
Total comprehensive income attributable to noncontrolling interest | — | — | 7,929 | — | 7,929 | ||||||||||
Total comprehensive income/(loss) attributable to Darling | $ | 2,166 | $ | (4,261 | ) | $ | (142,164 | ) | $ | 9,468 | $ | (134,791 | ) |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income/(loss) | $ | 65,544 | $ | 86,132 | $ | 71,811 | $ | (157,943 | ) | $ | 65,544 | ||||
Earnings in investments in subsidiaries | (157,943 | ) | — | — | 157,943 | — | |||||||||
Other operating cash flows | 215,375 | (74,110 | ) | 73,753 | — | 215,018 | |||||||||
Net cash provided by operating activities | 122,976 | 12,022 | 145,564 | — | 280,562 | ||||||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (33,431 | ) | (68,145 | ) | (66,648 | ) | — | (168,224 | ) | ||||||
Acquisitions | — | — | (8,511 | ) | — | (8,511 | ) | ||||||||
Note receivable from affiliates | — | 53,056 | (53,056 | ) | — | — | |||||||||
Gross proceeds from sale of property, plant and equipment and other assets | 2,375 | 816 | 1,301 | — | 4,492 | ||||||||||
Proceeds from insurance settlements | — | — | 1,537 | — | 1,537 | ||||||||||
Net cash used in investing activities | (31,056 | ) | (14,273 | ) | (125,377 | ) | — | (170,706 | ) | ||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds for long-term debt | — | — | 28,765 | — | 28,765 | ||||||||||
Payments on long-term debt | (87,411 | ) | — | (40,953 | ) | — | (128,364 | ) | |||||||
Borrowings from revolving facilities | 83,000 | — | — | — | 83,000 | ||||||||||
Payments on revolving facilities | (83,000 | ) | — | (10,028 | ) | — | (93,028 | ) | |||||||
Issuances of common stock | 143 | — | — | — | 143 | ||||||||||
Repurchase of treasury stock | (5,000 | ) | — | — | — | (5,000 | ) | ||||||||
Minimum withholding taxes paid on stock awards | (1,718 | ) | — | (125 | ) | — | (1,843 | ) | |||||||
Distributions to noncontrolling interests | — | — | (885 | ) | — | (885 | ) | ||||||||
Net cash used in financing activities | (93,986 | ) | — | (23,226 | ) | — | (117,212 | ) | |||||||
Effect of exchange rate changes on cash | — | — | (943 | ) | — | (943 | ) | ||||||||
Net increase/(decrease) in cash and cash equivalents | (2,066 | ) | (2,251 | ) | (3,982 | ) | — | (8,299 | ) | ||||||
Cash and cash equivalents at beginning of year | 3,443 | 3,993 | 149,448 | — | 156,884 | ||||||||||
Cash and cash equivalents at end of year | $ | 1,377 | $ | 1,742 | $ | 145,466 | $ | — | $ | 148,585 |
Parent | Guarantors | Non-guarantors | Eliminations | Consolidated | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income/(loss) | $ | (596 | ) | $ | (4,261 | ) | $ | (5,207 | ) | $ | 9,468 | $ | (596 | ) | |
Earnings in investments in subsidiaries | 9,468 | — | — | (9,468 | ) | — | |||||||||
Other operating cash flows | 74,837 | 39,901 | 182,512 | — | 297,250 | ||||||||||
Net cash provided by operating activities | 83,709 | 35,640 | 177,305 | — | 296,654 | ||||||||||
Cash flows from investing activities: | |||||||||||||||
Capital expenditures | (28,830 | ) | (70,947 | ) | (62,487 | ) | — | (162,264 | ) | ||||||
Investment in subsidiaries and affiliates | (20 | ) | (29,541 | ) | 29,541 | 20 | — | ||||||||
Note receivable from affiliates | — | 51,019 | (51,019 | ) | — | — | |||||||||
Gross proceeds from sale of property, plant and equipment and other assets | 707 | 807 | 959 | — | 2,473 | ||||||||||
Proceeds from insurance settlements | 71 | 490 | — | — | 561 | ||||||||||
Payments related to routes and other intangibles | — | — | (2,939 | ) | — | (2,939 | ) | ||||||||
Net cash used in investing activities | (28,072 | ) | (48,172 | ) | (85,945 | ) | 20 | (162,169 | ) | ||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds for long-term debt | — | — | 586,199 | — | 586,199 | ||||||||||
Payments on long-term debt | (12,092 | ) | (55 | ) | (583,725 | ) | — | (595,872 | ) | ||||||
Borrowings from revolving credit facility | 25,000 | — | 53,244 | — | 78,244 | ||||||||||
Payments on revolving credit facility | (60,000 | ) | — | (70,876 | ) | — | (130,876 | ) | |||||||
Net cash overdraft financing | — | — | (1,261 | ) | — | (1,261 | ) | ||||||||
Deferred loan costs | (7,104 | ) | — | (10,015 | ) | — | (17,119 | ) | |||||||
Issuances of common stock | 171 | — | — | — | 171 | ||||||||||
Repurchase of treasury stock | (5,912 | ) | — | — | — | (5,912 | ) | ||||||||
Contributions from parent | — | — | 20 | (20 | ) | — | |||||||||
Minimum withholding taxes paid on stock awards | (4,838 | ) | — | — | — | (4,838 | ) | ||||||||
Distributions to noncontolling interests | — | — | (2,820 | ) | — | (2,820 | ) | ||||||||
Net cash used in financing activities | (64,775 | ) | (55 | ) | (29,234 | ) | (20 | ) | (94,084 | ) | |||||
Effect of exchange rate changes on cash | — | — | (299 | ) | — | (299 | ) | ||||||||
Net increase/(decrease) in cash and cash equivalents | (9,138 | ) | (12,587 | ) | 61,827 | — | 40,102 | ||||||||
Cash and cash equivalents at beginning of year | 10,447 | 14,460 | 83,877 | — | 108,784 | ||||||||||
Cash and cash equivalents at end of year | $ | 1,309 | $ | 1,873 | $ | 145,704 | $ | — | $ | 148,886 |
• | No material items for three months ended October 1, 2016 were noted. |
• | $1.3 million or $0.4 million, net of tax ($0.00 per diluted share) associated with the integration of VION Ingredients and Rothsay and the implementation of internal controls over financial reporting per the Sarbanes-Oxley Act of 2002 for VION Ingredients. |
Three Months Ended | ||||||
(dollars in thousands) | October 1, 2016 | October 3, 2015 | ||||
Net income/(loss) attributable to Darling | $ | 28,694 | $ | (9,087 | ) | |
Depreciation and amortization | 70,653 | 67,327 | ||||
Interest expense | 23,867 | 24,828 | ||||
Income tax expense/(benefit) | (744 | ) | 7,859 | |||
Foreign currency loss/(gain) | (354 | ) | 2,461 | |||
Other expense/(income), net | 2,007 | (1,004 | ) | |||
Equity in net (income)/loss of unconsolidated subsidiaries | (18,138 | ) | 12,021 | |||
Net income attributable to non-controlling interests | 196 | 1,730 | ||||
Adjusted EBITDA | $ | 106,181 | $ | 106,135 | ||
Acquisition and integration-related expenses | — | 1,280 | ||||
Pro forma Adjusted EBITDA (Non-GAAP) | $ | 106,181 | $ | 107,415 | ||
Foreign currency exchange impact (1) | (90 | ) | — | |||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | $ | 106,091 | $ | 107,415 | ||
DGD Joint Venture Adjusted EBITDA (Darling's Share) | $ | 22,543 | $ | (8,309 | ) |
Three Months Ended | ||||||
(dollars in thousands) | October 1, 2016 | July 2, 2016 | ||||
Net income/(loss) attributable to Darling | $ | 28,694 | $ | 31,999 | ||
Depreciation and amortization | 70,653 | 69,531 | ||||
Interest expense | 23,867 | 23,980 | ||||
Income tax expense/(benefit) | (744 | ) | 7,983 | |||
Foreign currency loss/(gain) | (354 | ) | (8 | ) | ||
Other expense/(income), net | 2,007 | 2,373 | ||||
Equity in net (income)/loss of unconsolidated subsidiaries | (18,138 | ) | (13,852 | ) | ||
Net income attributable to non-controlling interests | 196 | 1,992 | ||||
Adjusted EBITDA | $ | 106,181 | $ | 123,998 | ||
Acquisition and integration-related expenses | — | 70 | ||||
Pro forma Adjusted EBITDA (Non-GAAP) | $ | 106,181 | $ | 124,068 | ||
Foreign currency exchange impact (1) | 688 | — | ||||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | $ | 106,869 | $ | 124,068 | ||
DGD Joint Venture Adjusted EBITDA (Darling's Share) | $ | 22,543 | $ | 18,331 |
• | Finished product commodity prices |
• | Segment operating income |
• | Raw material processed |
• | Gross margin percentages |
• | Foreign currency |
• | Corporate activities |
Avg. Price 3rd Quarter 2016 | Avg. Price 3rd Quarter 2015 | Increase/(Decrease) | % Increase/(Decrease) | ||
Jacobsen: | |||||
MBM (Illinois) | $ 325.56/ton | $ 354.91/ton | $ (29.35)/ton | (8.3 | )% |
Feed Grade PM (Mid-South) | $ 364.37/ton | $ 391.55/ton | $ (27.18)/ton | (6.9 | )% |
Pet Food PM (Mid-South) | $ 593.47/ton | $ 532.45/ton | $ 61.02/ton | 11.5 | % |
Feather meal (Mid-South) | $ 432.57/ton | $ 499.12/ton | $ (66.55)/ton | (13.3 | )% |
BFT (Chicago) | $ 28.59/cwt | $ 29.42/cwt | $ (0.83)/cwt | (2.8 | )% |
YG (Illinois) | $ 24.01/cwt | $ 21.48/cwt | $ 2.53/cwt | 11.8 | % |
Corn (Illinois) | $ 3.42/bushel | $ 3.91/bushel | $ (0.49)/bushel | (12.5 | )% |
Reuters: | |||||
Palm Oil (CIF Rotterdam) | $ 705.00/MT | $ 558.00/MT | $ 147.00/MT | 26.3 | % |
Soy meal (CIF Rotterdam) | $ 403.00/MT | $ 380.00/MT | $ 23.00/MT | 6.1 | % |
Avg. Price 3rd Quarter 2016 | Avg. Price 2nd Quarter 2016 | Increase/(Decrease) | % Increase/(Decrease) | ||
Jacobsen: | |||||
MBM (Illinois) | $ 325.56/ton | $ 328.26/ton | $ (2.70)/ton | (0.8 | )% |
Feed Grade PM (Mid-South) | $ 364.37/ton | $ 305.58/ton | $ 58.79/ton | 19.2 | % |
Pet Food PM (Mid-South) | $ 593.47/ton | $ 557.81/ton | $ 35.66/ton | 6.4 | % |
Feather meal (Mid-South) | $ 432.57/ton | $ 358.91/ton | $ 73.66/ton | 20.5 | % |
BFT (Chicago) | $ 28.59/cwt | $ 32.57/cwt | $ (3.98)/cwt | (12.2 | )% |
YG (Illinois) | $ 24.01/cwt | $ 26.77/cwt | $ (2.76)/cwt | (10.3 | )% |
Corn (Illinois) | $ 3.42/bushel | $ 3.99/bushel | $ (0.57)/bushel | (14.3 | )% |
Reuters: | |||||
Palm Oil (CIF Rotterdam) | $ 705.00/MT | $ 702.00/MT | $ 3.00/MT | 0.4 | % |
Soy meal (CIF Rotterdam) | $ 403.00/MT | $ 409.00/MT | $ (6.00)/MT | (1.5 | )% |
Fats | Proteins | Other Rendering | Total Rendering | Used Cooking Oil | Bakery | Other | Total | |||||||||||||||||
Net sales three months ended October 3, 2015 | $ | 136.1 | $ | 210.1 | $ | 60.3 | $ | 406.5 | $ | 39.7 | $ | 56.0 | $ | 23.0 | $ | 525.2 | ||||||||
Increase/(decrease) in sales volumes | 10.8 | 26.1 | — | 36.9 | (0.9 | ) | 3.8 | — | 39.8 | |||||||||||||||
Increase/(decrease) in finished product prices | (1.7 | ) | (31.2 | ) | — | (32.9 | ) | 2.6 | (6.0 | ) | — | (36.3 | ) | |||||||||||
Increase/(decrease) due to currency exchange rates | 0.1 | 0.4 | 0.2 | 0.7 | — | — | — | 0.7 | ||||||||||||||||
Other change | — | — | 2.5 | 2.5 | — | — | (0.5 | ) | 2.0 | |||||||||||||||
Total change | 9.2 | (4.7 | ) | 2.7 | 7.2 | 1.7 | (2.2 | ) | (0.5 | ) | 6.2 | |||||||||||||
Net sales three months ended October 1, 2016 | $ | 145.3 | $ | 205.4 | $ | 63.0 | $ | 413.7 | $ | 41.4 | $ | 53.8 | $ | 22.5 | $ | 531.4 |
(in thousands, except percentages) | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||||||
Three Months Ended October 1, 2016 | |||||||||||||||
Net Sales | $ | 531,413 | $ | 261,997 | $ | 60,446 | $ | — | $ | 853,856 | |||||
Cost of sales and operating expenses | 413,602 | 211,318 | 46,247 | — | 671,167 | ||||||||||
Gross Margin | 117,811 | 50,679 | 14,199 | — | 182,689 | ||||||||||
Gross Margin % | 22.2 | % | 19.3 | % | 23.5 | % | — | % | 21.4 | % | |||||
Selling, general and administrative expense | 38,943 | 25,352 | 1,332 | 10,881 | 76,508 | ||||||||||
Acquisition and integration costs | — | — | — | — | — | ||||||||||
Depreciation and amortization | 43,614 | 17,383 | 6,896 | 2,760 | 70,653 | ||||||||||
Segment operating income/(loss) | 35,254 | 7,944 | 5,971 | (13,641 | ) | 35,528 | |||||||||
Equity in net income of unconsolidated subsidiaries | (36 | ) | — | 18,174 | — | 18,138 | |||||||||
Segment income/(loss) | 35,218 | 7,944 | 24,145 | (13,641 | ) | 53,666 |
(in thousands, except percentages) | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||||||
Three Months Ended October 3, 2015 | |||||||||||||||
Net Sales | $ | 525,213 | $ | 269,230 | $ | 59,319 | $ | — | $ | 853,762 | |||||
Cost of sales and operating expenses | 409,030 | 214,406 | 47,885 | — | 671,321 | ||||||||||
Gross Margin | 116,183 | 54,824 | 11,434 | — | 182,441 | ||||||||||
Gross Margin % | 22.1 | % | 20.4 | % | 19.3 | % | — | % | 21.4 | % | |||||
Selling, general and administrative expense | 39,718 | 26,118 | 4,459 | 4,731 | 75,026 | ||||||||||
Acquisition and integration costs | — | — | — | 1,280 | 1,280 | ||||||||||
Depreciation and amortization | 40,846 | 17,144 | 6,729 | 2,608 | 67,327 | ||||||||||
Segment operating income/(loss) | 35,619 | 11,562 | 246 | (8,619 | ) | 38,808 | |||||||||
Equity in net income of unconsolidated subsidiaries | 309 | — | (12,330 | ) | — | (12,021 | ) | ||||||||
Segment income/(loss) | 35,928 | 11,562 | (12,084 | ) | (8,619 | ) | 26,787 |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||
Three Months Ended October 1, 2016 | ||||||||||
Gross Margin % | 22.2 | % | 19.3 | % | 23.5 | % | — | % | 21.4 | % |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||
Three Months Ended October 3, 2015 | ||||||||||
Gross Margin % | 22.1 | % | 20.4 | % | 19.3 | % | — | % | 21.4 | % |
• | $0.4 million or $0.3 million net of tax ($0.00 per diluted share) associated with ERP integration at the Company's Canadian subsidiary. The integration is complete and further expenditures are not anticipated. |
• | $7.8 million or $2.7 million net of tax ($0.02 per diluted share) associated with the integration of VION Ingredients and Rothsay related to a staff reduction in Angoulême, France and the implementation of internal controls over financial reporting per the Sarbanes-Oxley Act of 2002 during the first nine months of fiscal 2015. |
• | $10.6 million or $3.6 million net of tax ($0.02 per diluted share) related to the write-off of deferred loan costs associated with the retirement of the Company's European portion of its term loan B note on June 3, 2015. |
Nine Months Ended | ||||||
(dollars in thousands) | October 1, 2016 | October 3, 2015 | ||||
Net income/(loss) attributable to Darling | $ | 61,772 | $ | (5,898 | ) | |
Depreciation and amortization | 212,440 | 199,970 | ||||
Interest expense | 71,748 | 82,222 | ||||
Income tax expense/(benefit) | 9,102 | 14,639 | ||||
Foreign currency loss/(gain) | 2,241 | 3,299 | ||||
Other expense/(income), net | 5,685 | 704 | ||||
Equity in net (income)/loss of unconsolidated subsidiaries | (37,633 | ) | 9,657 | |||
Net income attributable to non-controlling interests | 3,772 | 5,302 | ||||
Adjusted EBITDA | $ | 329,127 | $ | 309,895 | ||
Acquisition and integration-related expenses | 401 | 7,807 | ||||
Pro forma Adjusted EBITDA (Non-GAAP) | $ | 329,528 | $ | 317,702 | ||
Foreign currency exchange impact (1) | 1,427 | — | ||||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | $ | 330,955 | $ | 317,702 | ||
DGD Joint Venture Adjusted EBITDA (Darling's Share) | $ | 50,503 | $ | 1,946 |
• | Finished product commodity prices |
• | Segment operating income |
• | Raw material processed |
• | Gross margin percentages |
• | Foreign currency |
• | Corporate activities |
Avg. Price First Nine Months 2016 | Avg. Price First Nine Months 2015 | Increase/(Decrease) | % Increase/(Decrease) | ||
Jacobsen: | |||||
MBM (Illinois) | $ 291.60/ton | $ 362.97/ton | $ (71.37)/ton | (19.7 | )% |
Feed Grade PM (Mid-South) | $ 306.35/ton | $ 427.83/ton | $ (121.48)/ton | (28.4 | )% |
Pet Food PM (Mid-South) | $ 552.53/ton | $ 569.69/ton | $ (17.16)/ton | (3.0 | )% |
Feather meal (Mid-South) | $ 356.23/ton | $ 507.34/ton | $ (151.11)/ton | (29.8 | )% |
BFT (Chicago) | $ 29.41/cwt | $ 29.42/cwt | $ (0.01)/cwt | — | % |
YG (Illinois) | $ 24.01/cwt | $ 23.10/cwt | $ 0.91/cwt | 3.9 | % |
Corn (Illinois) | $ 3.74/bushel | $ 3.87/bushel | $ (0.13)/bushel | (3.4 | )% |
Reuters: | |||||
Palm Oil (CIF Rotterdam) | $ 680.00/MT | $ 621.00/MT | $ 59.00/MT | 9.5 | % |
Soy meal (CIF Rotterdam) | $ 380.00/MT | $ 404.00/MT | $ (24.00)/MT | (5.9 | )% |
Fats | Proteins | Other Rendering | Total Rendering | Used Cooking Oil | Bakery | Other | Total | |||||||||||||||||
Net sales first nine months ended October 3, 2015 | $ | 422.7 | $ | 640.0 | $ | 188.1 | $ | 1,250.8 | $ | 118.9 | $ | 164.1 | $ | 68.3 | $ | 1,602.1 | ||||||||
Increase/(decrease) in sales volumes | 23.3 | 60.7 | — | 84.0 | 0.5 | 6.5 | — | 91.0 | ||||||||||||||||
Increase/(decrease) in finished product prices | (21.0 | ) | (122.7 | ) | — | (143.7 | ) | (1.8 | ) | (5.9 | ) | — | (151.4 | ) | ||||||||||
Increase/(decrease) due to currency exchange rates | (1.5 | ) | (1.5 | ) | (0.1 | ) | (3.1 | ) | (0.2 | ) | — | — | (3.3 | ) | ||||||||||
Other change | — | — | 12.0 | 12.0 | — | — | 0.1 | 12.1 | ||||||||||||||||
Total change | 0.8 | (63.5 | ) | 11.9 | (50.8 | ) | (1.5 | ) | 0.6 | 0.1 | (51.6 | ) | ||||||||||||
Net sales first nine months ended October 1, 2016 | $ | 423.5 | $ | 576.5 | $ | 200.0 | $ | 1,200.0 | $ | 117.4 | $ | 164.7 | $ | 68.4 | $ | 1,550.5 |
(in thousands, except percentages) | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||||||
Nine Months Ended October 1, 2016 | |||||||||||||||
Net Sales | $ | 1,550,539 | $ | 782,014 | $ | 178,285 | $ | — | $ | 2,510,838 | |||||
Cost of sales and operating expenses | 1,202,404 | 611,151 | 133,620 | — | 1,947,175 | ||||||||||
Gross Margin | 348,135 | 170,863 | 44,665 | — | 563,663 | ||||||||||
Gross Margin % | 22.5 | % | 21.8 | % | 25.1 | % | — | % | 22.4 | % | |||||
Selling, general and administrative expense | 127,513 | 69,566 | 4,986 | 32,070 | 234,135 | ||||||||||
Acquisition and integration costs | — | — | — | 401 | 401 | ||||||||||
Depreciation and amortization | 130,110 | 51,823 | 20,999 | 9,508 | 212,440 | ||||||||||
Segment operating income/(loss) | 90,512 | 49,474 | 18,680 | (41,979 | ) | 116,687 | |||||||||
Equity in net income of unconsolidated subsidiaries | 290 | — | 37,343 | — | 37,633 | ||||||||||
Segment income/(loss) | 90,802 | 49,474 | 56,023 | (41,979 | ) | 154,320 |
(in thousands, except percentages) | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||||||
Nine Months Ended October 3, 2015 | |||||||||||||||
Net Sales | $ | 1,602,141 | $ | 822,741 | $ | 162,889 | $ | — | $ | 2,587,771 | |||||
Cost of sales and operating expenses | 1,237,936 | 654,233 | 131,949 | — | 2,024,118 | ||||||||||
Gross Margin | 364,205 | 168,508 | 30,940 | — | 563,653 | ||||||||||
Gross Margin % | 22.7 | % | 20.5 | % | 19.0 | % | — | % | 21.8 | % | |||||
Selling, general and administrative expense | 136,397 | 79,461 | 6,204 | 23,889 | 245,951 | ||||||||||
Acquisition and integration costs | — | — | — | 7,807 | 7,807 | ||||||||||
Depreciation and amortization | 121,386 | 51,126 | 19,959 | 7,499 | 199,970 | ||||||||||
Segment operating income/(loss) | 106,422 | 37,921 | 4,777 | (39,195 | ) | 109,925 | |||||||||
Equity in net income of unconsolidated subsidiaries | 1,128 | — | (10,785 | ) | — | (9,657 | ) | ||||||||
Segment income/(loss) | 107,550 | 37,921 | (6,008 | ) | (39,195 | ) | 100,268 |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||
Nine Months Ended October 1, 2016 | ||||||||||
Gross Margin % | 22.5 | % | 21.8 | % | 25.1 | % | — | % | 22.4 | % |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||
Nine Months Ended October 3, 2015 | ||||||||||
Gross Margin % | 22.7 | % | 20.5 | % | 19.0 | % | — | % | 21.8 | % |
Senior Notes: | |||
5.375 % Notes due 2022 | $ | 500,000 | |
Less unamortized deferred loan costs | (7,994 | ) | |
Carrying value of 5.375% Notes due 2022 | $ | 492,006 | |
4.75 % Notes due 2022 - Denominated in euros | $ | 574,740 | |
Less unamortized deferred loan costs | (9,847 | ) | |
Carrying value of 4.75% Notes due 2022 | $ | 564,893 | |
Amended Credit Agreement: | |||
Term Loan A | $ | 187,590 | |
Less unamortized deferred loan costs | (861 | ) | |
Carrying value of Term Loan A | 186,729 | ||
Term Loan B | $ | 585,000 | |
Less unamortized deferred loan costs | (6,670 | ) | |
Carrying value of Term Loan B | $ | 578,330 | |
Revolving Credit Facility: | |||
Maximum availability | $ | 1,000,000 | |
Borrowings outstanding | — | ||
Letters of credit issued | 26,272 | ||
Availability | $ | 973,728 |
• | As of October 1, 2016, the Company had unused capacity of $973.7 million under the revolving loan facility, taking into account that the Company had no outstanding borrowings and letters of credit issued of $26.3 million. The revolving loan facility will mature on September 27, 2018. |
• | As of October 1, 2016, the Company has borrowed all $350.0 million under the term loan A facility and repaid approximately CAD$32.4 million and $101.8 million, which when repaid, cannot be reborrowed. The term loan A facility is repayable in quarterly installments as follows: for the first eight quarters following January 6, 2014, 1.25% of the original principal amount of the term loan A facility, for the ninth through sixteenth quarters following January 6, 2014, 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 October 1, 2016, the Company has borrowed all $1.3 billion under the terms of the term loan B facility and repaid approximately €510.0 million and $15.0 million, 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 following January 6, 2014, and continuing until the last day of each quarter period ending immediately prior to January 7, 2021; and one final installment in the amount of the relevant term loan B facility then outstanding, due on January 7, 2021. 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%. |
Other commercial commitments: | |||
Standby letters of credit | $ | 26,272 | |
Foreign bank guarantees | 10,632 | ||
Total other commercial commitments: | $ | 36,904 |
Functional Currency | Contract Currency | Range of | U.S. | ||||||||
Type | Amount | Type | Amount | Hedge rates | Equivalent | ||||||
Brazilian real | 28,514 | Euro | 6,850 | 3.68 - 4.83 | $ | 8,788 | |||||
Brazilian real | 73,423 | U.S. dollar | 20,125 | 3.24 - 4.38 | 20,125 | ||||||
Euro | 188,728 | U.S. dollar | 211,779 | 1.10 - 1.14 | 211,779 | ||||||
Euro | 9,825 | Polish zloty | 43,000 | 4.31 - 4.44 | 10,965 | ||||||
Euro | 3,395 | Japanese yen | 385,211 | 111.64 - 115.76 | 3,790 | ||||||
Euro | 33,928 | Chinese renminbi | 254,639 | 7.46 - 7.52 | 37,863 | ||||||
Euro | 11,126 | Australian dollar | 16,400 | 1.47 | 12,417 | ||||||
Euro | 117 | British pound | 100 | 0.86 | 130 | ||||||
Polish zloty | 19,027 | Euro | 4,379 | 4.29 - 4.40 | 4,916 | ||||||
Japanese yen | 25,835 | U.S. dollar | 237 | 100.53 - 116.63 | 237 | ||||||
$ | 311,010 |
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 John O. Muse, 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 John O. Muse, 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 October 1, 2016 and January 2, 2016; (ii) Consolidated Statements of Operations for the three and nine months ended October 1, 2016 and October 3, 2015; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended October 1, 2016 and October 3, 2015; (iv) Consolidated Statements of Cash Flows for the nine months ended October 1, 2016 and October 3, 2015; (v) Notes to the Consolidated Financial Statements. |
DARLING INGREDIENTS INC. | |||
Date: | November 10, 2016 | By: | /s/ Randall C. Stuewe |
Randall C. Stuewe | |||
Chairman and | |||
Chief Executive Officer |
Date: | November 10, 2016 | By: | /s/ John O. Muse |
John O. Muse | |||
Executive Vice President | |||
Chief Financial Officer | |||
(Principal Financial Officer) |
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: | November 10, 2016 |
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: | November 10, 2016 |
/s/ Randall C. Stuewe | /s/ John O. Muse | ||
Randall C. Stuewe | John O. Muse | ||
Chief Executive Officer | Chief Financial Officer | ||
Date: November 10, 2016 | Date: November 10, 2016 |
Document and Entity Information Document - shares |
9 Months Ended | |
---|---|---|
Oct. 01, 2016 |
Nov. 03, 2016 |
|
Document - Entity Information [Abstract] | ||
Entity Registrant Name | DARLING INGREDIENTS INC. | |
Entity Central Index Key | 0000916540 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 01, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 164,604,558 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Oct. 01, 2016 |
Jan. 02, 2016 |
---|---|---|
Assets: | ||
Property, plant and equipment, accumulated depreciation | $ 802,172 | $ 652,875 |
Intangible assets, accumulated amortization | $ 286,316 | $ 252,719 |
Stockholders’ equity: | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 167,619,651 | 167,070,983 |
Treasury stock, shares | 3,028,857 | 2,335,607 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2016 |
Oct. 03, 2015 |
Oct. 01, 2016 |
Oct. 03, 2015 |
|
Income Statement [Abstract] | ||||
Net sales | $ 853,856 | $ 853,762 | $ 2,510,838 | $ 2,587,771 |
Costs and expenses: | ||||
Cost of sales and operating expenses | 671,167 | 671,321 | 1,947,175 | 2,024,118 |
Selling, general and administrative expenses | 76,508 | 75,026 | 234,135 | 245,951 |
Acquisition and integration costs | 0 | 1,280 | 401 | 7,807 |
Depreciation and amortization | 70,653 | 67,327 | 212,440 | 199,970 |
Total costs and expenses | 818,328 | 814,954 | 2,394,151 | 2,477,846 |
Operating income | 35,528 | 38,808 | 116,687 | 109,925 |
Other expense: | ||||
Interest expense | (23,867) | (24,828) | (71,748) | (82,222) |
Foreign currency gain/(loss) | 354 | (2,461) | (2,241) | (3,299) |
Other income/(expense), net | (2,007) | 1,004 | (5,685) | (704) |
Total other expense | (25,520) | (26,285) | (79,674) | (86,225) |
Equity in net income of unconsolidated subsidiaries | 18,138 | (12,021) | 37,633 | (9,657) |
Income before income taxes | 28,146 | 502 | 74,646 | 14,043 |
Income tax expense/(benefit) | (744) | 7,859 | 9,102 | 14,639 |
Net income/(loss) | 28,890 | (7,357) | 65,544 | (596) |
Net income attributable to noncontrolling interests | (196) | (1,730) | (3,772) | (5,302) |
Net income/(loss) attributable to Darling | $ 28,694 | $ (9,087) | $ 61,772 | $ (5,898) |
Basic income per share (in dollars per share) | $ 0.17 | $ (0.06) | $ 0.38 | $ (0.04) |
Diluted income per share (in dollars per share) | $ 0.17 | $ (0.06) | $ 0.37 | $ (0.04) |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2016 |
Oct. 03, 2015 |
Oct. 01, 2016 |
Oct. 03, 2015 |
|
Net income/(loss) | $ 28,890 | $ (7,357) | $ 65,544 | $ (596) |
Other comprehensive income/(loss), net of tax: | ||||
Foreign currency translation | (5,839) | (43,295) | 43,684 | (129,167) |
Pension adjustments | 727 | 780 | 2,104 | 2,327 |
Total other comprehensive income/(loss), net of tax | (4,378) | (40,654) | 47,043 | (126,266) |
Total comprehensive income/(loss) | 24,512 | (48,011) | 112,587 | (126,862) |
Comprehensive income/(loss) attributable to noncontrolling interests | (94) | 39 | 1,211 | 7,929 |
Comprehensive income/(loss) attributable to Darling | 24,606 | (48,050) | 111,376 | (134,791) |
Corn Option [Member] | ||||
Other comprehensive income/(loss), net of tax: | ||||
Derivative adjustments | $ 734 | $ 1,861 | $ 1,255 | $ 574 |
General |
9 Months Ended |
---|---|
Oct. 01, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General The accompanying consolidated financial statements for the three and nine month periods ended October 1, 2016 and October 3, 2015, have been prepared by Darling Ingredients Inc., a Delaware corporation (“Darling”, and together with its subsidiaries, the “Company”) in accordance with generally accepted accounting principles in the United States (“GAAP”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting only of normal recurring accruals) that are, in the opinion of management, necessary to present a fair statement of the financial position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily indicative of the results expected for a full fiscal year. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, management of the Company believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Form 10-K for the fiscal year ended January 2, 2016. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies
The consolidated financial statements include the accounts of Darling and its consolidated subsidiaries. Noncontrolling interests represent the outstanding ownership interest in the Company's consolidated subsidiaries that are not owned by the Company. In the accompanying Consolidated Statements of Operations, the noncontrolling interest in net income (loss) of the consolidated subsidiaries is shown as an allocation of the Company's net income and is presented separately as “Net income/(loss) attributable to noncontrolling interests”. In the Company's Consolidated Balance Sheets, noncontrolling interests represent the ownership interests in the Company consolidated subsidiaries' net assets held by parties other than the Company. These ownership interests are presented separately as “Noncontrolling interests” within “Stockholders' Equity.” All significant intercompany balances and transactions have been eliminated in consolidation.
The Company has a 52/53 week fiscal year ending on the Saturday nearest December 31. Fiscal periods for the consolidated financial statements included herein are as of October 1, 2016, and include the 13 and 39 weeks ended October 1, 2016, and the 13 and 39 weeks ended October 3, 2015.
The Company recognizes revenue on sales when products are shipped and the customer takes ownership and assumes risk of loss. Certain customers may be required to prepay prior to shipment in order to maintain payment protection related to certain foreign and domestic sales. These amounts are recorded as unearned revenue and recognized when the products have shipped and the customer takes ownership and assumes risk of loss. The Company recognizes service revenue in the fiscal month the service occurs.
Foreign currency translation is included as a component of accumulated other comprehensive income and reflects the adjustments resulting from translating the foreign currency denominated financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company's foreign subsidiaries is the currency of the primary economic environment in which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at fiscal period end exchange rates, including intercompany foreign currency transactions that are of long-term investment nature. Income and expense items are translated at average exchange rates occurring during the period. Changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains and losses in determining net income. The Company incurred net foreign currency translation gains of approximately $46.2 million for the nine months ended October 1, 2016 and net foreign currency translation losses of approximately $131.8 million for the nine months ended October 3, 2015.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Basic income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares including non-vested and restricted shares outstanding during the period. Diluted income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares outstanding during the period increased by dilutive common equivalent shares determined using the treasury stock method.
For the three months ended October 1, 2016 and October 3, 2015, respectively, 1,228,334 and 905,903 outstanding stock options were excluded from diluted income per common share as the effect was antidilutive. For the three months ended October 1, 2016 and October 3, 2015, respectively, 887,413 and 646,813 shares of non-vested stock and stock equivalents were excluded from diluted income per common share as the effect was antidilutive. For the nine months ended October 1, 2016 and October 3, 2015, respectively, 1,122,165 and 947,095 outstanding stock options were excluded from diluted income per common share as the effect was antidilutive. For the nine months ended October 1, 2016 and October 3, 2015, respectively, 812,780 and 685,624 shares of non-vested stock and stock equivalents were excluded from diluted income per common share as the effect was antidilutive. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories A summary of inventories follows (in thousands):
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Intangible Assets |
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Intangible Asset Disclosure Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets The gross carrying amount of intangible assets not subject to amortization and intangible assets subject to amortization is as follows (in thousands):
Gross intangible routes, permits, trade names, non-compete agreements and other intangibles partially decreased in fiscal 2016 as a result of approximately $27.7 million of asset retirements. Amortization expense for the three and nine months ended October 1, 2016 and October 3, 2015, was approximately $19.6 million, $20.8 million and $58.4 million, $63.1 million, respectively. |
Goodwill |
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Intangible Asset Disclosure Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill Changes in the carrying amount of goodwill (in thousands):
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Investment in Unconsolidated Subsidiary |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Unconsolidated Subsidiary | Investment in Unconsolidated Subsidiaries On January 21, 2011 a wholly-owned subsidiary of Darling entered into a limited liability company agreement with a wholly-owned subsidiary of Valero Energy Corporation (“Valero”) to form Diamond Green Diesel Holdings LLC (the “DGD Joint Venture”). The DGD Joint Venture is owned 50% / 50% with Valero and was formed to design, engineer, construct and operate a renewable diesel plant (the “DGD Facility”), which is capable of processing approximately 12,000 barrels per day of input feedstock to produce renewable diesel fuel and certain other co-products, and is located adjacent to Valero's refinery in Norco, Louisiana. The DGD Joint Venture reached mechanical completion and began the production of renewable diesel in late June 2013. On May 31, 2011, the DGD Joint Venture and Diamond Green Diesel LLC, a wholly-owned subsidiary of the DGD Joint Venture (“Opco”), entered into (i) a facility agreement (the “Facility Agreement”) with Diamond Alternative Energy, LLC, a wholly-owned subsidiary of Valero (the “Lender”), and (ii) a loan agreement (the “Loan Agreement”) with the Lender, which provided the DGD Joint Venture with a 14 year multiple advance term loan facility of approximately $221.3 million (the “JV Loan”) to support the design, engineering and construction of the DGD Facility, which is now in production. The Facility Agreement and the Loan Agreement prohibit the Lender from assigning all or any portion of the Facility Agreement or the Loan Agreement to unaffiliated third parties. Opco has also pledged substantially all of its assets to the Lender, and the DGD Joint Venture has pledged all of Opco's equity interests to the Lender, until the JV Loan has been paid in full and the JV Loan has terminated in accordance with its terms. In addition to the DGD Joint Venture, the Company has investments in other unconsolidated subsidiaries that are insignificant to the Company. Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):
As of October 1, 2016 under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $238.1 million on the consolidated balance sheet and has recorded an equity net gain of approximately $37.3 million and an equity net loss of approximately $10.8 million for the nine months ended October 1, 2016 and October 3, 2015, respectively. In the second quarter of fiscal 2016, the DGD Joint Venture received $156.4 million of the 2015 calendar year blenders tax credits from the Internal Revenue Service, made a debt payment of approximately $54.7 million and made dividend distributions to each partner in the amount $25.0 million. Additionally, with Congress' extension of the biodiesel blenders tax credit in December 2015 through December 31, 2016, the DGD Joint Venture fiscal 2016 results include blenders tax credits, while no blenders tax credits are included in the same period in the prior year. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt consists of the following (in thousands):
In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU amends ASC (Subtopic 835-30), Interest - Imputation of Interest. The new standard requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of the debt liability, which is similar to the presentation of debt discounts or premiums. The costs will continue to be amortized to interest expense using the effective interest method. On January 3, 2016, the Company adopted this standard as a change in accounting principal on a retrospective basis. As of October 1, 2016 and January 2, 2016, the Company has presented debt issuance costs related to the Company's term loans and senior notes, previously reported in other assets, as direct deductions from the carrying amount of the debt liability. In addition, the Company has presented the debt issuance costs related to the Company's amended credit agreement as a deferred asset within other assets as permitted by ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which was issued in August 2015. Upon adoption of ASU No. 2015-03, other assets of approximately $29.0 million were reclassified as a deduction from the carrying value of the recognized debt liability at January 2, 2016. As of October 1, 2016, the Company had outstanding debt under a term loan facility denominated in Canadian dollars of CAD$117.6 million. See below for discussion relating to the Company's debt agreements. In addition, as of October 1, 2016, the Company had capital lease obligations denominated in Canadian dollars included in debt. The current and long-term capital lease obligation was approximately CAD$1.8 million and CAD$1.4 million, respectively. As of October 1, 2016, the Company had outstanding debt under the Company's 4.75% Senior Notes due 2022 denominated in euros of €515.0 million. See below for discussion relating to the Company's debt agreements. In addition, at October 1, 2016, the Company had capital lease obligations denominated in euros included in debt. The current and long-term capital lease obligation was approximately €0.4 million and €0.3 million, respectively. Senior Secured Credit Facilities. On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V. (“Darling NL”) entered into a Second Amended and Restated Credit Agreement (as subsequently amended, the “Amended Credit Agreement”), restating its then existing Amended and Restated Credit Agreement dated September 27, 2013 (the “Former Credit Agreement”), with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents from time to time party thereto. The Company's Amended Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of $2.65 billion comprised of (i) the Company's $350.0 million term loan A facility, (ii) the Company's $1.3 billion term loan B facility and (iii) the Company's $1.0 billion five-year revolving loan facility (approximately $250.0 million of which is available for a letter of credit sub-facility and $50.0 million of which is available for a swingline sub-facility) (collectively, the “Senior Secured Credit Facilities”). The Amended Credit Agreement also permits Darling and the other borrowers thereunder to incur ancillary facilities provided by any revolving lender party to the Senior Secured Credit Facilities (with certain restrictions). Up to $350.0 million of the revolving loan facility is available to be borrowed by Darling in U.S. dollars, Canadian dollars, euros and other currencies to be agreed and available to each applicable lender, to be borrowed by Darling Canada in Canadian dollars and to be borrowed by Darling NL, Darling Ingredients International Holding B.V. (“Darling BV”) and CTH Germany GmbH (“CTH”) in U.S. dollars, euros and other currencies to be agreed and available to each applicable lender. The revolving loan facility and term loan A facility will mature on September 27, 2018, and 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%. As of October 1, 2016, the Company had $86.3 million outstanding under the term loan A facility at LIBOR plus a margin of 2.50% per annum for a total of 3.0625% per annum and $12.0 million outstanding under the term loan A facility at base rate plus a margin of 1.50% per annum for a total of 5.00% per annum. The Company had $585.0 million outstanding under the term loan B facility at LIBOR plus a margin of 2.50% per annum for a total of 3.25% per annum. The Company had CAD$117.6 million outstanding under the term loan A facility at CDOR plus a margin of 2.50% per annum for a total of 3.4624% per annum. As of October 1, 2016, the Company had unused capacity of $973.7 million under the Amended Credit Agreement taking into account amounts borrowed and letters of credit issued of $26.3 million. The Company also has foreign bank guarantees that are not part of the Company's Amended Credit Agreement in the amount of approximately $10.6 million at October 1, 2016. The Amended Credit Agreement contains various customary representations and warranties by the Company, which include customary use of materiality, material adverse effect and knowledge qualifiers. The Amended Credit Agreement also contains (a) certain affirmative covenants that impose certain reporting and/or performance obligations on Darling and its subsidiaries, (b) certain negative covenants that generally prohibit, subject to various exceptions, Darling and its restricted subsidiaries from taking certain actions, including, without limitation, incurring indebtedness, making investments, incurring liens, paying dividends and engaging in mergers and consolidations, sale and leasebacks and asset dispositions, (c) financial covenants, which include a maximum total leverage ratio, a maximum secured leverage ratio and a minimum interest coverage ratio and (d) customary events of default (including a change of control) for financings of this type. Obligations under the Senior Secured Credit Facilities may be declared due and payable upon the occurrence and during the continuance of customary events of default. 5.375 % Senior Notes due 2022. On January 2, 2014, Darling Escrow Corporation, a wholly-owned subsidiary of Darling, issued $500.0 million aggregate principal amount of its 5.375% Notes due 2022 (the “5.375% Notes”) pursuant to a 5.375% Notes Indenture, dated as of January 2, 2014 (the “Original 5.375% Indenture”), among Darling Escrow Corporation, the subsidiary guarantors party thereto from time to time, and U.S. Bank National Association, as trustee (the “5.375% Trustee”). On January 8, 2014, Darling Escrow Corporation merged with and into Darling and entered into a supplemental indenture with Darling, the subsidiary guarantors party thereto and the 5.375% Trustee (the “Supplemental 5.375% Indenture,” and together with the Original 5.375% Indenture, the “5.375% Indenture”), pursuant to which Darling assumed all obligations under the 5.375% Notes and the 5.375% Indenture. Darling and the 5.375% Guarantors completed a registered exchange offer for the 5.375% Notes under the Securities Act during the third quarter of 2014. Darling used a portion of the proceeds from the offering of the 5.375% Notes to pay certain fees and expenses (including bank fees and expenses) related to the offering and the financing of its acquisition of its Darling Ingredients International business from VION Holding, N.V. ( the “VION Acquisition”) and for purposes of satisfying, discharging and redeeming its 8.5% Notes due 2018. Darling used the remaining proceeds of the 5.375% Notes to pay certain other fees and expenses related to the completion of the VION Acquisition and its related financings, to repay a portion of the borrowings under its revolving credit facility used to fund a portion of the consideration for the VION Acquisition and for general corporate purposes. The 5.375% Notes will mature on January 15, 2022. Darling will pay interest on the 5.375% Notes on January 15 and July 15 of each year, commencing on July 15, 2014. Interest on the 5.375% Notes will accrue at a rate of 5.375% per annum and be payable in cash. The 5.375% Notes are guaranteed on an unsecured senior basis by all of Darling's restricted subsidiaries (other than any foreign subsidiary or any receivables entity) that guarantee the Senior Secured Credit Facilities (the “5.375% Guarantors”). The 5.375% Notes and the guarantees thereof are senior unsecured obligations of Darling and the 5.375% Guarantors and rank equally in right of payment to all of Darling's and the 5.375% Guarantors' existing and future senior unsecured indebtedness. The 5.375% Indenture contains covenants limiting Darling's ability and the ability of its restricted subsidiaries to, among other things: incur additional indebtedness or issue preferred stock; pay dividends on or make distributions or repurchases of Darling's capital stock or make other restricted payments; create restrictions on the payment of dividends or other amounts from Darling's restricted subsidiaries to Darling or Darling's other restricted subsidiaries; make loans or investments; enter into certain transactions with affiliates; create liens; designate Darling's subsidiaries as unrestricted subsidiaries; and sell certain assets or merge with or into other companies or otherwise dispose of all or substantially all of Darling's assets. Other than for extraordinary events such as change of control and defined assets sales, Darling is not required to make mandatory redemption or sinking fund payments on the 5.375% Notes. The 5.375% Notes are redeemable, in whole or in part, at any time on or after January 15, 2017 at the redemption prices specified in the 5.375% Indenture. Darling may redeem some or all of the 5.375% Notes at any time prior to January 15, 2017, at a redemption price equal to 100% of the principal amount of the 5.375% Notes redeemed, plus accrued and unpaid interest to the redemption date and an Applicable Premium as specified in the 5.375% Indenture. 4.75 % Senior Notes due 2022. On June 3, 2015, Darling Global Finance B.V. (the “4.75% Issuer”), a wholly-owned subsidiary of Darling, issued €515.0 million aggregate principal amount of the 4.75% Senior Notes due 2022 (the “4.75% Notes”) pursuant to a Senior Notes Indenture, dated as of June 3, 2015 (the “4.75% Indenture”), among the 4.75% Issuer, Darling (as guarantor), the subsidiary guarantors party thereto from time to time, Citibank, N.A., London Branch, as trustee (the “4.75% Trustee”) and principal paying agent, and Citigroup Global Markets Deutschland AG, as principal registrar. Darling used the gross proceeds from the sale of the 4.75% Notes to refinance a portion of the term loan B outstanding under Darling's Senior Secured Credit Facilities and to pay certain fees and expenses related to the offering of the 4.75% Notes and the refinancing of the term loan B. Darling intends to use any remaining proceeds for general corporate purposes. The 4.75% Notes will mature on May 30, 2022. The 4.75% Issuer will pay interest on the 4.75% Notes on May 30 and November 30 of each year, commencing on November 30, 2015. Interest on the 4.75% Notes will accrue from June 3, 2015 at a rate of 4.75% per annum and be payable in cash. The 4.75% Notes are guaranteed on a senior unsecured basis by Darling and all of Darling's restricted subsidiaries (other than any foreign subsidiary, the 4.75% Issuer or any receivables entity) that guarantee the Senior Secured Credit Facilities (collectively “4.75% Guarantors”). The 4.75% Notes and the guarantees thereof are senior unsecured obligations of the 4.75% Issuer and the 4.75% Guarantors and rank equally in right of payment to all of the 4.75% Issuer's and the 4.75% Guarantors' existing and future senior unsecured indebtedness. The 4.75% Indenture contains covenants limiting Darling's ability and the ability of its restricted subsidiaries (including the 4.75% Issuer) to, among other things: incur additional indebtedness or issue preferred stock; pay dividends on or make other distributions or repurchases of Darling's capital stock or make other restricted payments; create restrictions on the payment of dividends or certain other amounts from Darling's restricted subsidiaries to Darling or Darling's other restricted subsidiaries; make loans or investments; enter into certain transactions with affiliates; create liens; designate Darling's subsidiaries as unrestricted subsidiaries; and sell certain assets or merge with or into other companies or otherwise dispose of all of substantially all of Darling's assets. Other than for extraordinary events such as change of control and defined assets sales, the 4.75% Issuer is not required to make mandatory redemption or sinking fund payments on the 4.75% Notes. The 4.75% Notes are redeemable, in whole or in part, at any time on or after May 30, 2018 at the redemption prices specified in the 4.75% Indenture. The 4.75% Issuer may redeem some or all of the 4.75% Notes at any time prior to May 30, 2018, at a redemption price equal to 100% of the principal amount of the 4.75% Notes redeemed, plus accrued and unpaid interest to the redemption date and an Applicable Premium as specified in the 4.75% Indenture and all additional amounts (if any) then due or which will become due on the redemption date as a result of the redemption or otherwise (subject to the rights of holders on the relevant record dates to receive interest due on the relevant interest payment date and additional amounts (if any) in respect thereof). As of October 1, 2016, the Company believes it is in compliance with all of the financial covenants under the Amended Credit Agreement, as well as all of the other covenants contained in the Amended Credit Agreement, the 5.375% Indenture and the 4.75% Indenture. |
Income Taxes |
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Oct. 01, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company has provided income taxes for the three and nine month periods ended October 1, 2016 and October 3, 2015, based on its estimate of the effective tax rate for the entire 2016 and 2015 fiscal years. The Company’s estimated annual effective tax rate is based on forecasts of income by jurisdiction, permanent differences between book and tax income, including Subpart F income and biofuel tax incentives, the relative proportion of income and losses by jurisdiction, and statutory income tax rates. Discrete events such as the assessment of the ultimate outcome of tax audits, audit settlements, recognizing previously unrecognized tax benefits due to the lapsing of statutes of limitation, recognizing or derecognizing deferred tax assets due to projections of income or loss and changes in tax laws are recognized in the period in which they occur. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company expects to indefinitely reinvest the earnings of its foreign subsidiaries outside of the United States and has generally not provided deferred income taxes on the accumulated earnings of its foreign subsidiaries. The Company periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends and its outlook for future years. Certain VION Companies acquired as part of the VION Acquisition have deferred tax assets for tax loss carryforwards, and the Company has recorded valuation allowances in respect to those losses to the extent it has been determined that it is not more likely than not that the deferred tax assets will be realized. Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. As of October 1, 2016, the Company had $3.6 million of gross unrecognized tax benefits and $1.8 million of related accrued interest and penalties. An indemnity receivable of $4.7 million has been recorded for the uncertain tax positions related to the VION Acquisition. It is reasonably possible within the next twelve months that the Company’s gross unrecognized tax benefits may decrease by up to $2.4 million, excluding interest and penalties, primarily due to potential settlements and expiration of certain statutes of limitations. The Company’s major taxing jurisdictions include the United States (federal and state), Canada, the Netherlands, Belgium, Brazil, Germany, France and China. The Company is subject to regular examination by various tax authorities and although the final outcome of these examinations is not yet determinable, the Company does not anticipate that any of the examinations will have a significant impact on the Company's results of operations or financial position. The statute of limitations for the Company’s major tax jurisdictions is open for varying periods, but is generally closed through the 2009 tax year. |
Other Comprehensive Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income | Other Comprehensive Income The Company follows FASB authoritative guidance for reporting and presentation of comprehensive income or loss and its components. Other comprehensive income (loss) is derived from adjustments that reflect pension adjustments, natural gas derivative adjustments, corn option adjustments and interest rate swap derivative adjustments. The components of other comprehensive income (loss) and the related tax impacts for the three and nine months months ended October 1, 2016 and October 3, 2015 are as follows (in thousands):
The following table presents the amounts reclassified out of each component of other comprehensive income (loss), net of tax for the three and nine months months ended October 1, 2016 and October 3, 2015 as follows (in thousands):
The following table presents changes in each component of accumulated comprehensive income (loss) as of October 1, 2016 as follows (in thousands):
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Stockholders' Equity |
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Oct. 01, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity In August 2015, the Company's Board of Directors approved a share repurchase program of up to an aggregate of $100.0 million of the Company's Common Stock depending on market conditions. The repurchases may be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market. Repurchases may occur over the 24 month period ending in August 2017, unless extended or shortened by the Board of Directors. During the first nine months of fiscal 2016, the Company repurchased approximately $5.0 million of its Common Stock in the open market. As of October 1, 2016, the Company has approximately $89.1 million remaining under the share repurchase program approved in August 2015. Fiscal 2015 Long-Term Incentive Opportunity Awards (2015 LTIP). The Company met the requisite performance measure under the 2015 LTIP. Accordingly, in accordance with the terms of the 2015 LTIP, the Company granted 452,878 stock options, 454,916 shares of nonvested stock and 147,390 restricted stock units in the first quarter of fiscal 2016. Fiscal 2016 Long-Term Incentive Opportunity Awards (2016 LTIP). On February 25, 2016, the Compensation Committee (the “Committee”) of the Company's Board of Directors adopted the 2016 LTIP pursuant to which they awarded certain of the Company's key employees, including the Company's named executive officers', 1,092,942 stock options and 663,419 performance share units (the “PSUs”) under the Company's 2012 Omnibus Incentive Plan. The stock options vest 33.33% on the first, second and third anniversaries of the grant date. The PSUs are tied to two- and three-year forward-looking performance periods and will be earned based on the Company's average return on capital employed (ROCE), as calculated in accordance with the terms of the award agreement, relative to the average ROCE of the Company's performance peer group companies, with the earned award to be determined in the first quarter of fiscal 2018 or fiscal 2019, respectively, after the final results for the relevant performance period are determined. The PSUs were granted at a target of 100%, but each PSU will reduce or increase depending on the Company's ROCE relative to that of the performance peer group companies and is also subject to the application of a total shareholder return (TSR) cap/collar modifier depending on the Company's TSR during the performance period relative to that of the performance peer group companies. In addition, certain of the PSUs have a two-year holding requirement after vesting before the PSUs are settled in shares of the Company's Common Stock. |
Employee Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans The Company has retirement and pension plans covering a substantial number of its domestic and foreign employees. Most retirement benefits are provided by the Company under separate final-pay noncontributory and contributory defined benefit and defined contribution plans for all salaried and hourly employees (excluding those covered by union-sponsored plans) who meet service and age requirements. Although various defined benefit formulas exist for employees, generally these are based on length of service and earnings patterns during employment. Effective January 1, 2012, the Company's Board of Directors authorized the Company to proceed with the restructuring of its domestic retirement benefit program to include the closing of Darling's salaried and hourly defined benefit plans to new participants as well as the freezing of service and wage accruals thereunder effective December 31, 2011 (a curtailment of these plans for financial reporting purposes) and the enhancing of benefits under the Company's domestic defined contribution plans. The Company-sponsored domestic hourly union plan has not been curtailed; however, several locations of the Company-sponsored domestic hourly union plan have been curtailed as a result of collective bargaining renewals for those sites. In March 2016 a small pension plan acquired in the VION Acquisition was amended to terminate the plan effective in May 2016 (a curtailment of the plan for financial reporting purposes at April 2, 2016). Net pension cost for the three and nine months months ended October 1, 2016 and October 3, 2015 includes the following components (in thousands):
The Company's funding policy for employee benefit pension plans is to contribute annually not less than the minimum amount required nor more than the maximum amount that can be deducted for federal and foreign income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. Based on actuarial estimates at October 1, 2016, the Company expects to contribute approximately $3.7 million to its pension plans to meet funding requirements during the next twelve months. Additionally, the Company has made tax deductible discretionary and required contributions to its pension plans for the nine months ended October 1, 2016 and October 3, 2015 of approximately $2.9 million and $5.0 million, respectively. The Company participates in various multiemployer pension plans which provide defined benefits to certain employees covered by labor contracts. These plans are not administered by the Company and contributions are determined in accordance with provisions of negotiated labor contracts to meet their pension benefit obligations to their participants. The Company's contributions to each multiemployer plan represent less than 5% of the total contributions to each such plan. Based on the most currently available information, the Company has determined that, if a withdrawal were to occur, withdrawal liabilities on two of the plans in which the Company currently participates could be material to the Company, with one of these material plans certified as critical or red zone. With respect to the other multiemployer pension plans in which the Company participates and which are not individually significant, six plans have certified as critical or red zone, one plan has certified as endangered or yellow zone as defined by the Pension Protection Act of 2006. The Company has received notices of withdrawal liability from two U.S. multiemployer plans in which it participated. As of October 1, 2016, the Company has an aggregate accrued liability of approximately $1.9 million representing the present value of scheduled withdrawal liability payments under these multiemployer plans. While the Company has no ability to calculate a possible current liability for under-funded multiemployer plans that could terminate or could require additional funding under the Pension Protection Act of 2006, the amounts could be material. |
Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives The Company’s operations are exposed to market risks relating to commodity prices that affect the Company’s cost of raw materials, finished product prices and energy costs and the risk of changes in interest rates and foreign currency exchange rates. The Company makes limited use of derivative instruments to manage cash flow risks related to natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. Natural gas swaps and options are entered into with the intent of managing the overall cost of natural gas usage by reducing the potential impact of seasonal weather demands on natural gas that increases natural gas prices. Heating oil swaps and options are entered into with the intent of managing the overall cost of diesel fuel usage by reducing the potential impact of seasonal weather demands on diesel fuel that increases diesel fuel prices. Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of bakery by-products (“BBP”) by reducing the impact of changing prices. Foreign currency forward contracts are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency. At October 1, 2016, the Company had corn option contracts outstanding that qualified and were designated for hedge accounting as well as heating oil swap contracts, corn option and forward contracts and foreign currency forward contracts that did not qualify and were not designated for hedge accounting. Entities are required to report all derivative instruments in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, on the reason for holding the instrument. If certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures to changes in fair value, cash flows or foreign currencies. If the hedged exposure is a cash flow exposure, the effective portion of the gain or loss on the derivative instrument is reported initially as a component of other comprehensive income (outside of earnings) and is subsequently reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness, as well as the ineffective portion of the gain or loss, are reported in earnings immediately. If the derivative instrument is not designated as a hedge, the gain or loss is recognized in earnings in the period of change. Cash Flow Hedges In fiscal 2015 and the first nine months of fiscal 2016, the Company entered into corn option contracts on the Chicago Board of Trade that are considered cash flow hedges. Under the terms of the corn option contracts, the Company hedged a portion of its U.S. forecasted sales of BBP through the fourth quarter of fiscal 2017. As of October 1, 2016, some of the contracts have settled while the remaining contract positions and activity are disclosed below. From time to time, the Company may enter into corn option contracts in the future. As of October 1, 2016, the Company had the following outstanding forward contract amounts that were entered into to hedge the future payments of intercompany note transactions, foreign currency transactions in currencies other than the functional currency and forecasted transactions in currencies other than the functional currency. All of these transactions are currently not designated for hedge accounting (in thousands):
The Company estimates the amount that will be reclassified from accumulated other comprehensive gain at October 1, 2016 into earnings over the next 12 months will be approximately $5.1 million. As of October 1, 2016, no amounts have been reclassified into earnings as a result of the discontinuance of cash flow hedges. The following table presents the fair value of the Company’s derivative instruments under FASB authoritative guidance as of October 1, 2016 and January 2, 2016 (in thousands):
The effect of the Company’s derivative instruments on the consolidated financial statements as of and for the three months ended October 1, 2016 and October 3, 2015 is as follows (in thousands):
The effect of the Company’s derivative instruments on the consolidated financial statements as of and for the nine months ended October 1, 2016 and October 3, 2015 is as follows (in thousands):
The table below summarizes the effect of derivatives not designated as hedges on the Company's consolidated statements of operations for the three and nine months months ended October 1, 2016 and October 3, 2015 (in thousands):
At October 1, 2016, the Company had forward purchase agreements in place for purchases of approximately $7.7 million of natural gas and diesel fuel. These forward purchase agreements have no net settlement provisions and the Company intends to take physical delivery of the underlying product. Accordingly, the forward purchase agreements are not subject to the requirements of fair value accounting because they qualify and the Company has elected to account for these as normal purchases as defined in the FASB authoritative guidance. |
Fair Value Measurement |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements FASB authoritative guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The following table presents the Company’s financial instruments that are measured at fair value on a recurring and nonrecurring basis as of October 1, 2016 and are categorized using the fair value hierarchy under FASB authoritative guidance. The fair value hierarchy has three levels based on the reliability of the inputs used to determine the fair value.
Derivative assets consist of the Company’s heating oil swap and option contracts, corn option and future contracts and foreign currency contracts, which represents the difference between observable market rates of commonly quoted intervals for similar assets and liabilities in active markets and the fixed swap rate considering the instruments term, notional amount and credit risk. See Note 12 (Derivatives) for breakdown by instrument type. Derivative liabilities consist of the Company’s heating oil swap and option contracts, corn option and future contracts and foreign currency contracts, which represents the difference between observable market rates of commonly quoted intervals for similar assets and liabilities in active markets and the fixed swap rate considering the instruments term, notional amount and credit risk. See Note 12 (Derivatives) for breakdown by instrument type. The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value due to the short maturity of these instruments and as such have been excluded from the table above. The carrying amount for the Company's other debt is not deemed to be significantly different than the fair value and all other instruments have been recorded at fair value. The fair value of the senior notes, term loan A, term loan B and revolver debt is based on market quotation from third-party banks. |
Contingencies |
9 Months Ended |
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Oct. 01, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is a party to lawsuits, claims and loss contingencies arising in the ordinary course of its business, including insured worker's compensation, auto, and general liability claims, assertions by certain regulatory and governmental agencies related to permitting requirements and/or air, wastewater and storm water discharges from the Company’s processing facilities, litigation involving tort, contract, statutory, labor, employment, and other claims, and tax matters. The Company’s workers compensation, auto and general liability policies contain significant deductibles or self-insured retentions. The Company estimates and accrues its expected ultimate claim costs related to accidents occurring during each fiscal year under these insurance policies and carries this accrual as a reserve until these claims are paid by the Company. As a result of the matters discussed above, the Company has established loss reserves for insurance, environmental, litigation and tax contingencies. At October 1, 2016 and January 2, 2016, the reserves for insurance, environmental, litigation and tax contingencies reflected on the balance sheet in accrued expenses and other non-current liabilities were approximately $54.4 million and $54.6 million, respectively. The Company has insurance recovery receivables of approximately $12.2 million as of October 1, 2016 and January 2, 2016, related to the insurance contingencies. The Company's management believes these reserves for contingencies are reasonable and sufficient based upon present governmental regulations and information currently available to management; however, there can be no assurance that final costs related to these contingencies will not exceed current estimates. The Company believes that the likelihood is remote that any additional liability from the lawsuits and claims that may not be covered by insurance would have a material effect on the Company's financial position, results of operations or cash flows. Lower Passaic River Area. In December 2009, the Company, along with numerous other entities, received notice from the United States Environmental Protection Agency (“EPA”) that the Company (as successor-in-interest to Standard Tallow Company) is considered a potentially responsible party (a “PRP”) with respect to alleged contamination in the lower Passaic River area which is part of the Diamond Alkali Superfund Site located in Newark, New Jersey. The Company’s designation as a PRP is based upon the operation of a former plant site located in Newark, New Jersey by Standard Tallow Company, an entity that the Company acquired in 1996. In the letter, EPA requested that the Company join a group of other parties in funding a remedial investigation and feasibility study at the site. As of the date of this report, the Company has not agreed to participate in the funding group. In March 2016, the Company received another letter from EPA notifying the Company that it had issued a Record of Decision selecting a remedy for the lower 8.3 miles of the lower Passaic River area at an estimated cost of $1.38 billion. The EPA letter makes no demand on the Company and lays out a framework for remedial design/remedial action implementation in which the EPA will first seek funding from major PRPs. The letter indicates that the EPA has sent the letter to over 100 parties, which include large chemical and refining companies, manufacturing companies, foundries, plastic companies, pharmaceutical companies and food and consumer product companies. The Company's ultimate liability, if any, for investigatory costs, remedial costs and/or natural resource damages in connection with the lower Passaic River area cannot be determined at this time; however, as of the date of this report, the Company has found no evidence that the former Standard Tallow Company plant site contributed any of the primary contaminants of concern to the Passaic River and, therefore, there is nothing that leads the Company to believe that this matter will have a material effect on the Company's financial position, results of operations or cash flows. Fresno Facility Permit Issue. The Company has been named as a defendant and a real party in interest in a lawsuit filed on April 9, 2012 in the Superior Court of the State of California, Fresno County, styled Concerned Citizens of West Fresno vs. Darling International Inc. The complaint, as subsequently amended, alleges that the Company's Fresno facility is operating without a proper use permit and seeks, among other things, injunctive relief. The complaint had at one time also alleged that the Company's Fresno facility constitutes a continuing private and public nuisance, but the plaintiff has since amended the complaint to drop these allegations. The City of Fresno was also named as a defendant in the original complaint but has since had a judgment entered in its favor and is no longer a defendant in the lawsuit; however, in December 2013 the City of Fresno filed a motion to intervene as a plaintiff in this matter. The Superior Court heard the motion on February 4, 2014, and entered an order on February 18, 2014 denying the motion. Rendering operations have been conducted on the site since 1955, and the Company believes that it possesses all of the required federal, state and local permits to continue to operate the facility in the manner currently conducted and that its operations do not constitute a private or public nuisance. Accordingly, the Company intends to defend itself vigorously in this matter. Discovery has begun and this matter was scheduled for trial in July 2014; however, the parties have agreed to stay the litigation while they participate in a mediation process. While management cannot predict the ultimate outcome of this matter, management does not believe the outcome will have a material effect on the Company's financial condition, results of operations or cash flows. |
Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments The Company sells its products domestically and internationally and operates within three industry segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The measure of segment profit (loss) includes all revenues, operating expenses (excluding certain amortization of intangibles), and selling, general and administrative expenses incurred at all operating locations and excludes general corporate expenses. Included in corporate activities are general corporate expenses and the amortization of certain intangibles. Assets of corporate activities include cash, unallocated prepaid expenses, deferred tax assets, prepaid pension, and miscellaneous other assets. Feed Ingredients Feed Ingredients consists principally of (i) the Company's U.S. ingredients business, including the Company's used cooking oil, trap grease and food residuals collection businesses, the Rothsay ingredients business, and the ingredients and specialty products businesses conducted by Darling Ingredients International under the Sonac name (proteins, fats, and plasma products) and (ii) the Company's bakery residuals business. Feed Ingredients operations process animal by-products and used cooking oil into fats, protein and hides. Food Ingredients Food Ingredients consists principally of (i) the gelatin and collagen hydrolysates business conducted by Darling Ingredients International under the Rousselot name, (ii) the natural casings and meat-by-products business conducted by Darling Ingredients International under the CTH name and (iii) certain specialty products businesses conducted by Darling Ingredients International under the Sonac name. Fuel Ingredients The Company's Fuel Ingredients segment consists of (i) the Company's biofuel business conducted under the Dar Pro® and Rothsay names (ii) the bioenergy business conducted by Darling Ingredients International under the Ecoson and Rendac names and (iii) the Company's investment in the DGD Joint Venture. Business Segments (in thousands):
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Related Party Transactions |
9 Months Ended |
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Oct. 01, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Raw Material Agreement The Company entered into a Raw Material Agreement with the DGD Joint Venture in May 2011 pursuant to which the Company will offer to supply certain animal fats and used cooking oil at market prices, up to the DGD Joint Venture's full operational requirement of feedstock, but the DGD Joint Venture is not obligated to purchase the raw material offered by the Company. Additionally, the Company may offer other feedstocks to the DGD Joint Venture, such as inedible corn oil, purchased on a resale basis. For the three months ended October 1, 2016 and October 3, 2015, the Company has recorded sales to the DGD Joint Venture of approximately $42.4 million and $42.8 million, respectively. For the nine months ended October 1, 2016 and October 3, 2015, the Company has recorded sales to the DGD Joint Venture of approximately $109.0 million and $125.8 million, respectively. At October 1, 2016 and January 2, 2016, the Company has $7.7 million and $5.1 million in outstanding receivables due from the DGD Joint Venture, respectively. In addition, the Company has eliminated approximately $5.8 million of additional sales for the three months ended October 1, 2016 to defer the Company's portion of profit of approximately $1.0 million on those sales relating to inventory assets remaining on the DGD Joint Venture's balance sheet at October 1, 2016. Revolving Loan Agreement On February 23, 2015, Darling through its wholly owned subsidiary Darling Green Energy LLC, (“Darling Green”) and a third party Diamond Alternative Energy, LLC (“Diamond Alternative” and together with Darling Green, the “DGD Lenders”) entered into a revolving loan agreement (the “DGD Loan Agreement”) with the DGD Joint Venture Opco. The DGD Lenders have committed to making loans available to Opco in the total amount of $10.0 million with each lender committed to $5.0 million of the total commitment. Any borrowings by Opco under the DGD Loan Agreement are at the applicable annum rate equal to the sum of (a) the LIBO Rate (meaning Reuters BBA Libor Rates Page 3750) on such day plus (b) 2.50%. The DGD Loan Agreement matures on December 31, 2016, unless extended by agreement of the parties. During the first nine months of fiscal 2016, Opco borrowed and repaid $2.5 million plus an insignificant amount of interest to Darling Green. As of October 1, 2016, no amounts are owed to Darling Green under the DGD Loan Agreement. |
New Accounting Pronoucements |
9 Months Ended |
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Oct. 01, 2016 | |
New Accounting Pronoucements [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. This ASU amends Topic 230, Statement of Cash Flows, which is intended to reduce the existing diversity in practice for classifying various types of cash flows including debt extinguishment costs, zero-coupon debt, contingent consideration related to business combinations, insurance proceeds, equity method distributions and beneficial interests in securitizations. This ASU is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. This ASU amends Topic 718, Compensation - Stock Compensation, which simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The ASU is effective for fiscal years beginning after December 15, 2016 and for interim periods therein. The Company is currently evaluating the impact of this standard. In March 2016, the FASB issued ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting. This ASU amends Topic 323, Investments - Equity Method and Joint Ventures, which eliminates the requirement to retrospectively apply equity method accounting when an entity increases ownership or influence in a previously held investment. The ASU is effective for fiscal years beginning after December 15, 2016 and for interim periods therein. The adoption of this standard will not have a material impact on the Company's consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (topic 842). Under the new ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance lessor accounting is largely unchanged. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. This ASU is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this standard. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This ASU amends Topic 330, Inventory. The ASU simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost and net realizable value. The ASU is effective for financial statements issued for fiscal years beginning after December 15, 2016 and for interim periods therein. The adoption of this standard will not have a material impact on the Company's consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede nearly all existing revenue recognition guidance under GAAP. The new ASU introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this ASU requires disclosures sufficient to enable the users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In July 2015, the FASB deferred the elective date of the standard by one year. This ASU allows for either full retrospective or modified retrospective adoption and will become effective for the Company for the fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact of this standard and the transition plan the Company will adopt. |
Guarantor Financial Information |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Financial Information | Guarantor Financial Information The Company's 5.375% Notes and 4.75% Notes (see Note 7) are guaranteed on a senior unsecured basis by the following Notes Guarantors, each of which is a 100% directly or indirectly owned subsidiary of Darling and which constitute all of Darling's existing restricted subsidiaries that are Credit Agreement Guarantors (other than Darling's foreign subsidiaries, Darling Global Finance B.V., which issued the 4.75% Notes and is discussed further below, or any receivables entity): Darling National, Griffin and its subsidiary Craig Protein, Darling AWS LLC, Terra Holding Company, Darling Global Holdings Inc., Darling Northstar LLC, TRS, EV Acquisition, Inc., Rousselot Inc., Rousselot Dubuque Inc., Sonac USA LLC and Rousselot Peabody Inc. In addition, the 4.75% Notes, which were issued by Darling Global Finance B.V., a wholly-owned indirect subsidiary of Darling, are guaranteed on a senior unsecured basis by Darling. The Notes Guarantors, and Darling in the case of the 4.75% Notes, fully and unconditionally guaranteed the 5.375% Notes and 4.75% Notes on a joint and several basis. The following financial statements present condensed consolidating financial data for (i) Darling, (ii) the combined Notes Guarantors, (iii) the combined other subsidiaries of the Company that did not guarantee the 5.375% Notes or the 4.75% Notes (the “Non-guarantors”), and (iv) eliminations necessary to arrive at the Company's consolidated financial statements, which include condensed consolidated balance sheets as of October 1, 2016 and January 2, 2016, and the condensed consolidating statements of operations, the condensed consolidating statements of comprehensive income and the condensed consolidating statements of cash flows for the three and nine months ended October 1, 2016 and October 3, 2015. Separate financial information is not presented for Darling Global Finance B.V. since it was formed as a special purpose finance subsidiary for the purpose of issuing the 4.75% Notes and therefore does not have any substantial operations or assets. Condensed Consolidating Balance Sheet As of October 1, 2016 (in thousands)
Condensed Consolidating Balance Sheet As of January 2, 2016 (in thousands)
Condensed Consolidating Statements of Operations For the three months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Operations For the nine months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Operations For the three months ended October 3, 2015 (in thousands)
Condensed Consolidating Statements of Operations For the nine months ended October 3, 2015 (in thousands)
Condensed Consolidating Statements of Comprehensive Income/(Loss) For the three months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Comprehensive Income/(Loss) For the nine months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Comprehensive Income/(Loss) For the three months ended October 3, 2015 (in thousands)
Condensed Consolidating Statements of Comprehensive Income/(Loss) For the nine months ended October 3, 2015 (in thousands)
Condensed Consolidating Statements of Cash Flows For the nine months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Cash Flows For the nine months ended October 3, 2015 (in thousands)
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Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Oct. 01, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of Darling and its consolidated subsidiaries. Noncontrolling interests represent the outstanding ownership interest in the Company's consolidated subsidiaries that are not owned by the Company. In the accompanying Consolidated Statements of Operations, the noncontrolling interest in net income (loss) of the consolidated subsidiaries is shown as an allocation of the Company's net income and is presented separately as “Net income/(loss) attributable to noncontrolling interests”. In the Company's Consolidated Balance Sheets, noncontrolling interests represent the ownership interests in the Company consolidated subsidiaries' net assets held by parties other than the Company. These ownership interests are presented separately as “Noncontrolling interests” within “Stockholders' Equity.” All significant intercompany balances and transactions have been eliminated in consolidation. |
Fiscal Periods | Fiscal Periods The Company has a 52/53 week fiscal year ending on the Saturday nearest December 31. Fiscal periods for the consolidated financial statements included herein are as of October 1, 2016, and include the 13 and 39 weeks ended October 1, 2016, and the 13 and 39 weeks ended October 3, 2015. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. |
Earnings Per Share | Earnings Per Share Basic income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares including non-vested and restricted shares outstanding during the period. Diluted income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares outstanding during the period increased by dilutive common equivalent shares determined using the treasury stock method. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue on sales when products are shipped and the customer takes ownership and assumes risk of loss. Certain customers may be required to prepay prior to shipment in order to maintain payment protection related to certain foreign and domestic sales. These amounts are recorded as unearned revenue and recognized when the products have shipped and the customer takes ownership and assumes risk of loss. The Company recognizes service revenue in the fiscal month the service occurs. |
Income Taxes | Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company expects to indefinitely reinvest the earnings of its foreign subsidiaries outside of the United States and has generally not provided deferred income taxes on the accumulated earnings of its foreign subsidiaries. The Company periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends and its outlook for future years. Certain VION Companies acquired as part of the VION Acquisition have deferred tax assets for tax loss carryforwards, and the Company has recorded valuation allowances in respect to those losses to the extent it has been determined that it is not more likely than not that the deferred tax assets will be realized. |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | Foreign Currency Translation and Remeasurement Foreign currency translation is included as a component of accumulated other comprehensive income and reflects the adjustments resulting from translating the foreign currency denominated financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company's foreign subsidiaries is the currency of the primary economic environment in which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at fiscal period end exchange rates, including intercompany foreign currency transactions that are of long-term investment nature. Income and expense items are translated at average exchange rates occurring during the period. Changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains and losses in determining net income. |
Summary of Significant Accounting Policies (Tables) |
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Oct. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Common Share | Basic income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares including non-vested and restricted shares outstanding during the period. Diluted income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares outstanding during the period increased by dilutive common equivalent shares determined using the treasury stock method.
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Inventories (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | A summary of inventories follows (in thousands):
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Intangible Assets (Tables) |
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Intangible Asset Disclosure Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets | The gross carrying amount of intangible assets not subject to amortization and intangible assets subject to amortization is as follows (in thousands):
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Goodwill (Tables) |
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Intangible Asset Disclosure Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Changes in the carrying amount of goodwill (in thousands):
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Investment in Unconsolidated Subsidiary (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Debt consists of the following (in thousands):
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Other Comprehensive Income (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Comprehensive Income (Loss) | The components of other comprehensive income (loss) and the related tax impacts for the three and nine months months ended October 1, 2016 and October 3, 2015 are as follows (in thousands):
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Reclassification out of Accumulated Other Comprehensive Income | The following table presents the amounts reclassified out of each component of other comprehensive income (loss), net of tax for the three and nine months months ended October 1, 2016 and October 3, 2015 as follows (in thousands):
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Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents changes in each component of accumulated comprehensive income (loss) as of October 1, 2016 as follows (in thousands):
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Employee Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net pension cost | Net pension cost for the three and nine months months ended October 1, 2016 and October 3, 2015 includes the following components (in thousands):
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Derivatives (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | All of these transactions are currently not designated for hedge accounting (in thousands):
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the fair value of the Company’s derivative instruments under FASB authoritative guidance as of October 1, 2016 and January 2, 2016 (in thousands):
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Schedule of Derivative Instruments, Gain (Loss) in Statement of Financial Performance | The effect of the Company’s derivative instruments on the consolidated financial statements as of and for the three months ended October 1, 2016 and October 3, 2015 is as follows (in thousands):
The effect of the Company’s derivative instruments on the consolidated financial statements as of and for the nine months ended October 1, 2016 and October 3, 2015 is as follows (in thousands):
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Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The table below summarizes the effect of derivatives not designated as hedges on the Company's consolidated statements of operations for the three and nine months months ended October 1, 2016 and October 3, 2015 (in thousands):
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Fair Value Measurement (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 01, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measured on recurring basis | The fair value hierarchy has three levels based on the reliability of the inputs used to determine the fair value.
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Business Segments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments (in thousands):
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Guarantor Financial Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Guarantor Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantor Financial Information Condensed Consolidating Balance Sheet | Condensed Consolidating Balance Sheet As of October 1, 2016 (in thousands)
Condensed Consolidating Balance Sheet As of January 2, 2016 (in thousands)
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Guarantor Financial Information Condensed Consolidating Statements Of Operations | Condensed Consolidating Statements of Operations For the three months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Operations For the nine months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Operations For the three months ended October 3, 2015 (in thousands)
Condensed Consolidating Statements of Operations For the nine months ended October 3, 2015 (in thousands)
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Guarantor Financial Information Condensed Consolidating Statements of Comprehensive Income (Loss) | Condensed Consolidating Statements of Comprehensive Income/(Loss) For the three months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Comprehensive Income/(Loss) For the nine months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Comprehensive Income/(Loss) For the three months ended October 3, 2015 (in thousands)
Condensed Consolidating Statements of Comprehensive Income/(Loss) For the nine months ended October 3, 2015 (in thousands)
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Guarantor Financial Information Condensed Consolidating Statements Of Cash Flows | Condensed Consolidating Statements of Cash Flows For the nine months ended October 1, 2016 (in thousands)
Condensed Consolidating Statements of Cash Flows For the nine months ended October 3, 2015 (in thousands)
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Inventories (Details) - USD ($) $ in Thousands |
Oct. 01, 2016 |
Jan. 02, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished product | $ 174,727 | $ 164,428 |
Work in process | 92,677 | 84,474 |
Raw Material | 39,239 | 48,401 |
Supplies and other | 52,452 | 47,280 |
Inventories | $ 359,095 | $ 344,583 |
Goodwill (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Oct. 01, 2016 |
Jan. 02, 2016 |
|
Segment Reporting Information [Line Items] | ||
Goodwill | $ 1,272,290 | $ 1,249,016 |
Accumulated impairment losses | (15,914) | (15,914) |
Goodwill | 1,256,376 | 1,233,102 |
Goodwill acquired during year | 829 | |
Foreign currency translation | 22,445 | |
Feed Ingredients [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 827,242 | 812,797 |
Accumulated impairment losses | (15,914) | (15,914) |
Goodwill | 811,328 | 796,883 |
Goodwill acquired during year | 827 | |
Foreign currency translation | 13,618 | |
Fuel Ingredients [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 116,497 | 112,834 |
Accumulated impairment losses | 0 | 0 |
Goodwill | 116,497 | 112,834 |
Goodwill acquired during year | 2 | |
Foreign currency translation | 3,661 | |
Food Ingredients [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 328,551 | 323,385 |
Accumulated impairment losses | 0 | 0 |
Goodwill | 328,551 | $ 323,385 |
Goodwill acquired during year | 0 | |
Foreign currency translation | $ 5,166 |
Investment in Unconsolidated Subsidiary (Assets, Liabilities and members' equity) (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
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ASSETS | ||
Property, plant and equipment, net | $ 354,285 | $ 356,230 |
Total assets | 575,771 | 620,708 |
Liabilities and members' equity: | ||
Total current portion of long term debt | 17,023 | 62,023 |
Total long term debt | 58,009 | 86,819 |
Total liabilities and member's equity | 476,238 | 451,551 |
Diamond Green Diesel Holdings LLC Joint Venture [Member] | ||
ASSETS | ||
Total current assets | 207,392 | 261,444 |
Other assets | 14,094 | 3,034 |
Liabilities and members' equity: | ||
Total other current liabilities | 24,093 | 19,935 |
Total other long term liabilities | 408 | 380 |
Equity Method Investment, Summarized Financial Information, Liabilities and Equity | $ 575,771 | $ 620,708 |
Investment in Unconsolidated Subsidiary (Revenues and Expenses) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
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Expenses: | ||||
Operating income | $ 37,642 | $ (21,578) | $ 80,637 | $ (11,033) |
Interest and debt expense, net | (1,406) | (3,122) | (6,148) | (10,629) |
Diamond Green Diesel Holdings LLC Joint Venture [Member] | ||||
Revenues: | ||||
Operating revenues | 141,656 | 107,160 | 345,650 | 380,048 |
Expenses: | ||||
Total costs and expenses less depreciation, amortization and accretion expense | 96,569 | 123,779 | 244,643 | 376,157 |
Depreciation, amortization and accretion expense | 7,445 | 4,959 | 20,370 | 14,924 |
Total costs and expenses | 104,014 | 128,738 | 265,013 | 391,081 |
Other income | 114 | 41 | 199 | 93 |
Net income/(loss) | $ 36,350 | $ (24,659) | $ 74,688 | $ (21,569) |
Debt (Senior Notes Due 2022) (Details) |
9 Months Ended | |||
---|---|---|---|---|
Oct. 01, 2016 |
Jun. 03, 2015
EUR (€)
|
Jan. 02, 2014
USD ($)
|
Dec. 17, 2010 |
|
Senior Notes [Member] | Senior Notes 5.375% Due 2022 [Member] | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | $ | $ 500,000,000 | |||
Stated interest rate | 5.375% | |||
Senior Notes [Member] | Senior Notes 5.375% Due 2022 [Member] | Prior to January 15, 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Redemption price, percentage | 100.00% | |||
Senior Notes [Member] | Senior Notes 4.75% Due 2022 [Member] | ||||
Debt Instrument [Line Items] | ||||
Face amount of debt instrument | € | € 515,000,000.0 | |||
Stated interest rate | 4.75% | |||
Senior Notes [Member] | Senior Notes 4.75% Due 2022 [Member] | Prior to May 30, 2018 [Member] | ||||
Debt Instrument [Line Items] | ||||
Redemption price, percentage | 100.00% | |||
Unsecured Debt [Member] | Senior Notes 8.5% due 2018 [Member] | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 8.50% |
Income Taxes (Details) $ in Millions |
Oct. 01, 2016
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits | $ 3.6 |
Income tax penalties and interest accrued | 1.8 |
Indemnity receivable | 4.7 |
Significant change in unrecognized tax benefits is reasonably possible, estimated change, upper bound | $ 2.4 |
Derivatives (Narrative) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2016 |
Oct. 03, 2015 |
Oct. 01, 2016 |
Oct. 03, 2015 |
|
Derivative [Line Items] | ||||
Net income/(loss) | $ 28,890,000 | $ (7,357,000) | $ 65,544,000 | $ (596,000) |
Commodity Contract [Member] | ||||
Derivative [Line Items] | ||||
Forward purchase amount | $ 7,700,000 | 7,700,000 | ||
Cash Flow Hedging [Member] | ||||
Derivative [Line Items] | ||||
Cash flow hedge gain (loss) to be reclassified within 12 months | 5,100,000 | |||
Net income/(loss) | $ 0 |
Contingencies (Details) $ in Millions |
1 Months Ended | ||
---|---|---|---|
Mar. 31, 2016
Party
mi
|
Oct. 01, 2016
USD ($)
|
Jan. 02, 2016
USD ($)
|
|
Loss Contingencies [Line Items] | |||
Loss Contingency, Estimate of Possible Loss, Area of Land | mi | 8.3 | ||
Loss Contingency, Estimate of Possible Loss | $ 1,380.0 | ||
Loss Contingency, Number of Parties | Party | 100 | ||
Insurance Environmental and Litigation Matters [Member] | |||
Loss Contingencies [Line Items] | |||
Reserves for insurance, environmental and litigation contingencies | 54.4 | $ 54.6 | |
Insurance Settlements Receivable, Noncurrent | $ 12.2 | $ 12.2 |
Business Segments (Narrative) (Details) |
Oct. 01, 2016
segment
|
---|---|
Segment Reporting [Abstract] | |
Number of Business Segments | 3 |
Guarantor Financial Information (Narrative) (Details) |
Oct. 01, 2016 |
---|---|
Guarantor Financial Information [Abstract] | |
Company's percentage of directly and indirectly owned subsidiaries | 100.00% |
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