Guarantor Financial Information

9 Months Ended

Sep. 28, 2019

Guarantor Financial Information [Abstract]

The Company's 5.25% Notes and 3.625% Notes (see Note 10) 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 3.625% Notes and is discussed further below, or any receivables entity): Darling National, Griffin and its subsidiary Craig Protein, Darling AWS LLC, Darling Global Holdings Inc., Darling Northstar LLC, EV Acquisition, LLC, Rousselot Inc., Rousselot Dubuque Inc., Sonac USA LLC and Rousselot Peabody Inc. In addition, the 3.625% 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 3.625% Notes, fully and unconditionally guaranteed the 5.25% Notes and 3.625% Notes on a joint and several basis. The following financial statements present condensed consolidated financial data for (i) Darling, (ii) the combined Notes Guarantors, (iii) the combined other subsidiaries of the Company that did not guarantee the 5.25% Notes or the 3.625% 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 September 28, 2019 and December 29, 2018, and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income/(loss) and the condensed consolidated statements of cash flows for the three and nine months ended September 28, 2019 and September 29, 2018. 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 euro-denominated notes such as the 3.625% Notes and therefore does not have any substantial operations or assets.

Condensed Consolidated Balance Sheet

As of September 28, 2019

(in thousands)



	Parent			Guarantors			Non-guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	542		$	26		$	68,554	$	—		$	69,122
Restricted cash	103			—			56		—			159
Accounts receivable	42,305			682,090			500,072		(869,461		)	355,006
Inventories	26,939			94,192			231,872		—			353,003
Income taxes refundable	1,544			—			3,408		—			4,952
Prepaid expenses	18,671			2,042			25,665		—			46,378
Other current assets	6,034			(2,057		)	37,856		(16,772		)	25,061
Total current assets	96,138			776,293			867,483		(886,233		)	853,681
Investment in subsidiaries	5,056,589			1,366,517			844,043		(7,267,149		)	—
Property, plant and equipment, net	426,046			510,433			778,289		—			1,714,768
Intangible assets, net	45,820			178,145			313,395		—			537,360
Goodwill	49,902			490,748			671,663		—			1,212,313
Investment in unconsolidated subsidiaries	12,878			—			434,811		—			447,689
Operating lease right-of-use asset	71,528			30,954			16,581		—			119,063
Other assets	36,165			145			48,143		(38,274		)	46,179
Deferred taxes	—			—			13,846		—			13,846
	$	5,795,066		$	3,353,235		$	3,988,254	$	(8,191,656	)	$	4,944,899
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	24,509		$	5		$	53,350	$	(16,772	)	$	61,092
Accounts payable	889,921			35,446			136,093		(869,450		)	192,010
Income taxes payable	(862		)	—			11,266		—			10,404
Current operating lease liability	19,220			10,225			5,778		—			35,223
Accrued expenses	103,571			28,667			164,936		(10		)	297,164
Total current liabilities	1,036,359			74,343			371,423		(886,232		)	595,893
Long-term debt, net of current portion	1,027,553			13			570,517		(38,274		)	1,559,809
Long-term operating lease liability	53,459			20,262			10,033		—			83,754
Other noncurrent liabilities	79,126			—			34,096		—			113,222
Deferred income taxes	99,986			—			119,343		—			219,329
Total liabilities	2,296,483			94,618			1,105,412		(924,506		)	2,572,007
Total stockholders’ equity	3,498,583			3,258,617			2,882,842		(7,267,150		)	2,372,892
	$	5,795,066		$	3,353,235		$	3,988,254	$	(8,191,656	)	$	4,944,899

Condensed Consolidated Balance Sheet

As of December 29, 2018

(in thousands)



	Parent			Guarantors			Non-guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	995		$	32		$	106,235	$	—		$	107,262
Restricted cash	103			—			4		—			107
Accounts receivable	56,113			619,628			461,005		(751,009		)	385,737
Inventories	23,752			83,261			234,015		—			341,028
Income taxes refundable	2,851			—			3,611		—			6,462
Prepaid expenses	12,890			2,936			19,421		—			35,247
Other current assets	2,680			(1,418		)	20,837		—			22,099
Total current assets	99,384			704,439			845,128		(751,009		)	897,942
Investment in subsidiaries	4,880,193			1,366,126			844,044		(7,090,363		)	—
Property, plant and equipment, net	375,824			503,130			808,904		—			1,687,858
Intangible assets, net	50,132			200,936			344,794		—			595,862
Goodwill	49,506			490,748			688,905		—			1,229,159
Investment in unconsolidated subsidiary	13,969			—			396,208		—			410,177
Other assets	39,395			138			13,842		—			53,375
Deferred income taxes	—			—			14,981		—			14,981
	$	5,508,403		$	3,265,517		$	3,956,806	$	(7,841,372	)	$	4,889,354
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	3,558		$	5		$	3,929	$	—		$	7,492
Accounts payable	783,406			24,388			162,678		(750,993		)	219,479
Income taxes payable	(10		)	—			4,053		—			4,043
Accrued expenses	107,572			33,387			168,541		(16		)	309,484
Total current liabilities	894,526			57,780			339,201		(751,009		)	540,498
Long-term debt, net of current portion	1,019,130			18			647,792		—			1,666,940
Other noncurrent liabilities	78,589			—			36,443		—			115,032
Deferred income taxes	95,710			—			135,353		—			231,063
Total liabilities	2,087,955			57,798			1,158,789		(751,009		)	2,553,533
Total stockholders’ equity	3,420,448			3,207,719			2,798,017		(7,090,363		)	2,335,821
	$	5,508,403		$	3,265,517		$	3,956,806	$	(7,841,372	)	$	4,889,354

Condensed Consolidated Statements of Operations

For the three months ended September 28, 2019

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Net sales	$	164,488		$	330,655		$	403,749		$	(56,843	)	$	842,049
Cost and expenses:
Cost of sales and operating expenses	130,498			273,238			306,030			(56,843		)	652,923
Gain on sale of assets	(86		)	(2,343		)	(240		)	—			(2,669		)
Selling, general and administrative expenses	41,225			12,319			30,005			—			83,549
Depreciation and amortization	15,071			25,317			40,019			—			80,407
Total costs and expenses	186,708			308,531			375,814			(56,843		)	814,210
Equity in net income of Diamond Green Diesel	—			—			32,020			—			32,020
Operating income/(loss)	(22,220		)	22,124			59,955			—			59,859

Interest expense	(13,862		)	(52		)	(5,445		)	—			(19,359		)
Foreign currency losses	(30		)	(4		)	500			—			466
Other expense, net	(2,026		)	(431		)	(157		)	—			(2,614		)
Equity in net income/(loss) of other unconsolidated subsidiaries	(1,172		)	—			507			—			(665		)
Earnings in investments in subsidiaries	52,697			—			—			(52,697		)	—
Income/(loss) before taxes	13,387			21,637			55,360			(52,697		)	37,687
Income tax expense/(benefit)	(12,334		)	6,472			16,712			—			10,850
Net income attributable to noncontrolling interests	—			—			(1,116		)	—			(1,116		)
Net income/(loss) attributable to Darling	$	25,721		$	15,165		$	37,532		$	(52,697	)	$	25,721

Condensed Consolidated Statements of Operations

For the nine months ended September 28, 2019

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Net sales	$	481,645		$	986,390		$	1,206,999		$	(170,557	)	$	2,504,477
Cost and expenses:
Cost of sales and operating expenses	384,408			813,491			921,210			(170,557		)	1,948,552
Gain on sale of assets	(44		)	(7,331		)	(13,470		)	—			(20,845		)
Selling, general and administrative expenses	129,218			35,042			85,309			—			249,569
Depreciation and amortization	43,668			76,594			118,795			—			239,057
Total costs and expenses	557,250			917,796			1,111,844			(170,557		)	2,416,333
Equity in net income of Diamond Green Diesel	—			—			94,390			—			94,390
Operating income/(loss)	(75,605		)	68,594			189,545			—			182,534

Interest expense	(42,967		)	(108		)	(17,013		)	—			(60,088		)
Debt extinguishment costs	(12,126		)	—			—			—			(12,126		)
Foreign currency losses	(31		)	(3		)	(620		)	—			(654		)
Other income/(expense), net	(4,878		)	(2,407		)	127			—			(7,158		)
Equity in net income/(loss) of other unconsolidated subsidiaries	(3,090		)	—			2,003			—			(1,087		)
Earnings in investments in subsidiaries	176,004			—			—			(176,004		)	—
Income/(loss) before taxes	37,307			66,076			174,042			(176,004		)	101,421
Income tax expense/(benefit)	(32,684		)	15,571			41,013			—			23,900
Net income attributable to noncontrolling interests	—			—			(7,530		)	—			(7,530		)
Net income/(loss) attributable to Darling	$	69,991		$	50,505		$	125,499		$	(176,004	)	$	69,991

Condensed Consolidated Statements of Operations

For the three months ended September 29, 2018

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Net sales	$	136,460		$	328,148		$	410,936		$	(62,968	)	$	812,576
Cost and expenses:
Cost of sales and operating expenses	108,008			274,159			328,730			(62,968		)	647,929
Loss (gain) on sale of assets	(29		)	(12		)	213			—			172
Selling, general and administrative expenses	34,967			7,457			25,023			—			67,447
Restructuring and impairment charges	—			—			—			—			—
Depreciation and amortization	12,036			25,322			41,484			—			78,842
Total costs and expenses	154,982			306,926			395,450			(62,968		)	794,390
Equity in net loss of Diamond Green Diesel	—			—			(2,630		)	—			(2,630		)
Operating income/(loss)	(18,522		)	21,222			12,856			—			15,556

Interest expense	(13,823		)	190			(6,447		)	—			(20,080		)
Debt extinguishment costs	—			—			—			—			—
Foreign currency gains/(losses)	(4		)	(2		)	(2,100		)	—			(2,106		)
Loss on sale of subsidiary	—			—			3,038			—			3,038
Other income/(expense), net	(1,791		)	(656		)	(339		)	—			(2,786		)
Equity in net income/(loss) of other unconsolidated subsidiaries	(732		)	—			570			—			(162		)
Earnings in investments in subsidiaries	28,438			—			—			(28,438		)	—
Income/(loss) before taxes	(6,434		)	20,754			7,578			(28,438		)	(6,540		)
Income tax expense/(benefit)	(397		)	179			(1,185		)	—			(1,403		)
Net income attributable to noncontrolling interests	—			—			(900		)	—			(900		)
Net income/(loss) attributable to Darling	$	(6,037	)	$	20,575		$	7,863		$	(28,438	)	$	(6,037	)

Condensed Consolidated Statements of Operations

For the nine months ended September 29, 2018

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Net sales	$	391,281		$	1,021,248		$	1,302,210		$	(180,143	)	$	2,534,596
Cost and expenses:
Cost of sales and operating expenses	306,298			821,220			1,031,354			(180,143		)	1,978,729
Loss (gain) on sale of assets	(230		)	(227		)	929			—			472
Selling, general and administrative expenses	115,138			32,719			85,050			—			232,907
Restructuring and impairment charges	—			—			14,965			—			14,965
Depreciation and amortization	34,672			77,555			123,688			—			235,915
Total costs and expenses	455,878			931,267			1,255,986			(180,143		)	2,462,988
Equity in net income of Diamond Green Diesel	—			—			109,655			—			109,655
Operating income/(loss)	(64,597		)	89,981			155,879			—			181,263

Interest expense	(42,380		)	7,193			(31,033		)	—			(66,220		)
Debt extinguishment costs	(15,635		)	—			(7,874		)	—			(23,509		)
Foreign currency gains/(losses)	(441		)	(96		)	(6,545		)	—			(7,082		)
Loss on sale of subsidiary	(15,538		)	—			3,038			—			(12,500		)
Other income/(expense), net	(15,405		)	(172		)	11,474			—			(4,103		)
Equity in net income/(loss) of other unconsolidated subsidiaries	(1,807		)	—			1,750			—			(57		)
Earnings in investments in subsidiaries	207,477			—			—			(207,477		)	—
Income/(loss) before taxes	51,674			96,906			126,689			(207,477		)	67,792
Income tax expense/(benefit)	(9,174		)	5,706			7,460			—			3,992
Net income attributable to noncontrolling interests	—			—			(2,952		)	—			(2,952		)
Net income/(loss) attributable to Darling	$	60,848		$	91,200		$	116,277		$	(207,477	)	$	60,848

Condensed Consolidated Statements of Comprehensive Income/(Loss)

For the three months ended September 28, 2019

(in thousands)



	Parent		Guarantors		Non-guarantors			Eliminations			Consolidated
Net income/(loss)	$	26,837	$	15,165	$	37,532		$	(52,697	)	$	26,837
Other comprehensive income/(loss), net of tax:
Foreign currency translation	1,328		—		(48,954		)	—			(47,626		)
Pension adjustments	767		—		92			—			859
Corn option derivative adjustments	553		—		—			—			553
Heating oil derivative adjustments	—		—		(1,683		)	—			(1,683		)
Foreign exchange derivative adjustments	—		—		(4,944		)	—			(4,944		)
Total other comprehensive income/(loss), net of tax	2,648		—		(55,489		)	—			(52,841		)
Total comprehensive income/(loss)	29,485		15,165		(17,957		)	(52,697		)	(26,004		)
Total comprehensive loss attributable to noncontrolling interest	—		—		1,120			—			1,120
Total comprehensive income/(loss) attributable to Darling	$	29,485	$	15,165	$	(19,077	)	$	(52,697	)	$	(27,124	)

Condensed Consolidated Statements of Comprehensive Income/(Loss)

For the nine months ended September 28, 2019

(in thousands)



	Parent		Guarantors		Non-guarantors			Eliminations			Consolidated
Net income/(loss)	$	77,521	$	50,505	$	125,499		$	(176,004	)	$	77,521
Other comprehensive income/ (loss), net of tax:
Foreign currency translation	1,509		—		(37,695		)	—			(36,186		)
Pension adjustments	2,300		—		276			—			2,576
Corn option derivative adjustments	575		—		—			—			575
Heating oil derivative adjustments	—		—		450			—			450
Foreign exchange derivative adjustments	—		—		(5,430		)	—			(5,430		)
Total other comprehensive income/(loss), net of tax	4,384		—		(42,399		)	—			(38,015		)
Total comprehensive income/(loss)	81,905		50,505		83,100			(176,004		)	39,506
Total comprehensive income attributable to noncontrolling interest	—		—		7,822			—			7,822
Total comprehensive income/(loss) attributable to Darling	$	81,905	$	50,505	$	75,278		$	(176,004	)	$	31,684

Condensed Consolidated Statements of Comprehensive Income/(Loss)

For the three months ended September 29, 2018

(in thousands)



	Parent			Guarantors		Non-guarantors			Eliminations			Consolidated
Net income/(loss)	$	(5,137	)	$	20,575	$	7,863		$	(28,438	)	$	(5,137	)
Other comprehensive income/(loss), net of tax:
Foreign currency translation	165			—		(5,749		)	—			(5,584		)
Pension adjustments	565			—		103			—			668
Soybean meal derivative adjustments	3			—		—			—			3
Corn option derivative adjustments	(40		)	—		—			—			(40		)
Foreign exchange derivative adjustment	—			—		309			—			309
Total other comprehensive income/(loss), net of tax	693			—		(5,337		)	—			(4,644		)
Total comprehensive income/(loss)	(4,444		)	20,575		2,526			(28,438		)	(9,781		)
Total comprehensive income attributable to noncontrolling interest	—			—		(538		)	—			(538		)
Total comprehensive income/(loss) attributable to Darling	$	(4,444	)	$	20,575	$	3,064		$	(28,438	)	$	(9,243	)

Condensed Consolidated Statements of Comprehensive Income/(Loss)

For the nine months ended September 29, 2018

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Net income/(loss)	$	63,800		$	91,200		$	116,277		$	(207,477	)	$	63,800
Other comprehensive income/(loss), net of tax:
Foreign currency translation	1,281			(53,387		)	(13,020		)	—			(65,126		)
Pension adjustments	1,696			—			305			—			2,001
Natural gas swap derivative adjustments	22			—			—			—			22
Soybean meal derivative adjustments	3			—			—			—			3
Corn option derivative adjustments	(1,198		)	—			—			—			(1,198		)
Foreign exchange derivative adjustments	—			—			309			—			309
Total other comprehensive income, net of tax	1,804			(53,387		)	(12,406		)	—			(63,989		)
Total comprehensive income/(loss)	65,604			37,813			103,871			(207,477		)	(189		)
Total comprehensive loss attributable to noncontrolling interest	—			—			1,981			—			1,981
Total comprehensive income/(loss) attributable to Darling	$	65,604		$	37,813		$	101,890		$	(207,477	)	$	(2,170	)

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 28, 2019

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Cash flows from operating activities:

Net income/(loss)	$	77,521		$	50,505		$	125,499		$	(176,004	)	$	77,521
Earnings in investments in subsidiaries	(176,004		)	—			—			176,004			—
Other operating cash flows	189,575			(2,763		)	(1,651		)	—			185,161
Net cash provided by operating activities	91,092			47,742			123,848			—			262,682

Cash flows from investing activities:
Capital expenditures	(88,639		)	(61,337		)	(95,116		)	—			(245,092		)
Acquisitions	(1,157		)	—			(274		)	—			(1,431		)
Investment in subsidiaries and affiliates	(2,393		)	(393		)	—			786			(2,000		)
Note receivable from affiliates	38,274			—			(38,274		)	—			—
Gross proceeds from sale of property, plant and equipment and other assets	380			12,223			2,799			—			15,402
Proceeds from insurance settlements	—			1,371			—			—			1,371
Payments related to routes and other intangibles	(131		)	—			(3,019		)	—			(3,150		)
Net cash used in investing activities	(53,666		)	(48,136		)	(133,884		)	786			(234,900		)

Cash flows from financing activities:
Proceeds for long-term debt	500,000			—			11,985			—			511,985
Payments on long-term debt	(545,872		)	(5		)	(20,230		)	—			(566,107		)
Borrowings from revolving facilities	176,000			—			149,485			—			325,485
Payments on revolving facilities	(152,000		)	—			(180,884		)	—			(332,884		)
Net cash overdraft financing	5,951			—			21,907			—			27,858
Deferred loan costs	(7,027		)	—			—			—			(7,027		)
Issuances of common stock	39			—			—			—			39
Repurchase of treasury stock	(11,740		)	—			—			—			(11,740		)
Contributions from parent	—			393			393			(786		)	—
Minimum withholding taxes paid on stock awards	(3,230		)	—			(17		)	—			(3,247		)
Distributions to noncontrolling interests	—			—			(4,500		)	—			(4,500		)
Net cash provided/(used) in financing activities	(37,879		)	388			(21,861		)	(786		)	(60,138		)

Effect of exchange rate changes on cash	—			—			(5,732		)	—			(5,732		)

Net decrease in cash, cash equivalents and restricted cash	(453		)	(6		)	(37,629		)	—			(38,088		)
Cash, cash equivalents and restricted cash at beginning of period	1,098			32			106,239			—			107,369
Cash, cash equivalents and restricted cash at end of period	$	645		$	26		$	68,610		$	—		$	69,281

Condensed Consolidated Statements of Cash Flows

For the nine months ended September 29, 2018

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net income/(loss)	$	63,800		$	91,200		$	116,277		$	(207,477	)	$	63,800
Earnings in investments in subsidiaries	(207,477		)	—			—			207,477			—
Other operating cash flows	187,663			(49,424		)	(2,341		)	—			135,898
Net cash provided/(used) by operating activities	43,986			41,776			113,936			—			199,698

Cash flows from investing activities:
Capital expenditures	(75,282		)	(65,079		)	(73,365		)	—			(213,726		)
Acquisitions	(51,301		)	—			—			—			(51,301		)
Investment in subsidiaries and affiliates	(10,000		)	(198,880		)	—			198,880			(10,000		)
Proceeds from sale of investment in subsidiary	80,000			—			2,805			—			82,805
Note receivable from affiliates	—			217,880			(217,880		)	—			—
Gross proceeds from sale of property, plant and equipment and other assets	1,282			843			1,236			—			3,361
Proceeds from insurance settlements	750			503			—			—			1,253
Payments related to routes and other intangibles	(246		)	—			(1,007		)	—			(1,253		)
Net cash used in investing activities	(54,797		)	(44,733		)	(288,211		)	198,880			(188,861		)

Cash flows from financing activities:
Proceeds for long-term debt	—			—			623,698			—			623,698
Payments on long-term debt	(10,090		)	—			(651,178		)	—			(661,268		)
Borrowings from revolving credit facility	238,000			—			148,436			—			386,436
Payments on revolving credit facility	(215,000		)	—			(147,463		)	—			(362,463		)
Net cash overdraft financing	—			—			3,361			—			3,361
Deferred loan costs	(824		)	—			(8,844		)	—			(9,668		)
Issuances of common stock	182			—			—			—			182
Contributions from parent	—			—			198,880			(198,880		)	—
Minimum withholding taxes paid on stock awards	(2,152		)	—			(63		)	—			(2,215		)
Distributions to noncontrolling interests	—			—			(8,005		)	—			(8,005		)
Net cash provided by financing activities	10,116			—			158,822			(198,880		)	(29,942		)

Effect of exchange rate changes on cash	—			—			(6,238		)	—			(6,238		)

Net decrease in cash, cash equivalents and restricted cash	(695		)	(2,957		)	(21,691		)	—			(25,343		)
Cash, cash equivalents and restricted cash at beginning of period	1,827			2,993			102,096			—			106,916
Cash, cash equivalents and restricted cash at end of period	$	1,132		$	36		$	80,405		$	—		$	81,573