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 fats and proteins, 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):



	Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate			Total
Three Months Ended July 1, 2017
Net Sales	$	549,119	$	279,827	$	67,402	$	—		$	896,348
Cost of sales and operating expenses	422,236		223,830		54,698		—			700,764
Gross Margin	126,883		55,997		12,704		—			195,584

Selling, general and administrative expense	43,506		26,788		2,902		12,335			85,531
Depreciation and amortization	44,354		18,184		7,715		2,737			72,990
Segment operating income/(loss)	39,023		11,025		2,087		(15,072		)	37,063

Equity in net income of unconsolidated subsidiaries	131		—		8,129		—			8,260
Segment income/(loss)	39,154		11,025		10,216		(15,072		)	45,323

Total other expense										(27,253		)
Income before income taxes										$	18,070



	Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate			Total
Three Months Ended July 2, 2016
Net Sales	$	542,955	$	272,120	$	62,266	$	—		$	877,341
Cost of sales and operating expenses	416,145		214,279		46,691		—			677,115
Gross Margin	126,810		57,841		15,575		—			200,226

Selling, general and administrative expense	43,319		20,455		1,804		10,580			76,158
Acquisition and integration costs	—		—		—		70			70
Depreciation and amortization	42,119		17,736		7,184		2,492			69,531
Segment operating income/(loss)	41,372		19,650		6,587		(13,142		)	54,467

Equity in net income of unconsolidated subsidiaries	224		—		13,628		—			13,852
Segment income/(loss)	41,596		19,650		20,215		(13,142		)	68,319

Total other expense										(26,345		)
Income before income taxes										$	41,974



	Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate			Total
Six Months Ended July 1, 2017
Net Sales	$	1,101,743	$	547,615	$	127,062	$	—		$	1,776,420
Cost of sales and operating expenses	854,846		434,831		100,714		—			1,390,391
Gross Margin	246,897		112,784		26,348		—			386,029

Selling, general and administrative expense	88,973		51,847		6,193		26,435			173,448
Depreciation and amortization	88,073		35,785		14,560		5,686			144,104
Segment operating income/(loss)	69,851		25,152		5,595		(32,121		)	68,477

Equity in net income of unconsolidated subsidiaries	240		—		8,726		—			8,966
Segment income/(loss)	70,091		25,152		14,321		(32,121		)	77,443

Total other expense										(50,157		)
Income before income taxes										$	27,286

Segment assets at July 1, 2017	$	2,542,793	$	1,466,675	$	658,039	$	162,369		$	4,829,876



	Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate			Total
Six Months Ended July 2, 2016
Net Sales	$	1,019,126	$	520,017	$	117,839	$	—		$	1,656,982
Cost of sales and operating expenses	788,802		399,833		87,373		—			1,276,008
Gross Margin	230,324		120,184		30,466		—			380,974

Selling, general and administrative expense	88,570		44,214		3,654		21,189			157,627
Acquisition and integration costs	—		—		—		401			401
Depreciation and amortization	86,496		34,440		14,103		6,748			141,787
Segment operating income/(loss)	55,258		41,530		12,709		(28,338		)	81,159

Equity in net income of unconsolidated subsidiaries	326		—		19,169		—			19,495
Segment income/(loss)	55,584		41,530		31,878		(28,338		)	100,654

Total other expense										(54,154		)
Income before income taxes										$	46,500

Segment assets at December 31, 2016	$	2,464,509	$	1,414,409	$	657,637	$	161,462		$	4,698,017