GUARANTOR FINANCIAL INFORMATION | GUARANTOR FINANCIAL INFORMATION The Company's 5.375% Notes and 4.75% 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 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 December 31, 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 years ended December 31, 2016 , January 2, 2016 and January 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 December 31, 2016 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated ASSETS Cash and cash equivalents $ 1,470 $ 5,754 $ 107,340 $ — $ 114,564 Restricted cash 103 — 190 — 293 Accounts receivable 39,209 97,220 339,251 (87,283 ) 388,397 Inventories 16,573 85,890 228,352 — 330,815 Income taxes refundable 3,566 — 3,913 — 7,479 Prepaid expenses 11,152 2,769 16,063 — 29,984 Other current assets 5,859 3,165 19,221 (6,475 ) 21,770 Total current assets 77,932 194,798 714,330 (93,758 ) 893,302 Investment in subsidiaries 4,296,200 1,154,398 909,263 (6,359,861 ) — Property, plant and equipment, net 233,456 497,312 784,807 — 1,515,575 Intangible assets, net 13,746 291,724 406,457 — 711,927 Goodwill 21,860 549,960 654,073 — 1,225,893 Investment in unconsolidated subsidiaries 1,438 — 291,279 — 292,717 Other assets 36,063 396,222 160,505 (549,177 ) 43,613 Deferred income taxes — — 14,990 — 14,990 $ 4,680,695 $ 3,084,414 $ 3,935,704 $ (7,002,796 ) $ 4,698,017 LIABILITIES AND STOCKHOLDERS’ EQUITY Current portion of long-term debt $ 4,220 $ — $ 25,502 $ (6,475 ) $ 23,247 Accounts payable 116,075 18,142 130,718 (84,040 ) 180,895 Income taxes payable (383 ) 373 4,923 — 4,913 Accrued expenses 86,581 33,834 125,624 (3,243 ) 242,796 Total current liabilities 206,493 52,349 286,767 (93,758 ) 451,851 Long-term debt, net of current portion 1,109,523 — 1,167,349 (549,176 ) 1,727,696 Other noncurrent liabilities 63,072 — 33,042 — 96,114 Deferred income taxes 140,543 — 205,591 — 346,134 Total liabilities 1,519,631 52,349 1,692,749 (642,934 ) 2,621,795 Total stockholders' equity 3,161,064 3,032,065 2,242,955 (6,359,862 ) 2,076,222 $ 4,680,695 $ 3,084,414 $ 3,935,704 $ (7,002,796 ) $ 4,698,017 Condensed Consolidating Balance Sheet As of January 2, 2016 (in thousands) 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 tax 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 Condensed Consolidating Statements of Operations For the year ended December 31, 2016 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Net sales $ 501,856 $ 1,341,925 $ 1,752,844 $ (198,510 ) $ 3,398,115 Cost and expenses: Cost of sales and operating expenses 392,876 1,085,582 1,361,786 (198,510 ) 2,641,734 Selling, general and administrative expenses 130,573 51,029 132,403 — 314,005 Depreciation and amortization 41,106 105,261 143,541 — 289,908 Acquisition and integration costs — — 401 — 401 Total costs and expenses 564,555 1,241,872 1,638,131 (198,510 ) 3,246,048 Operating income (62,699 ) 100,053 114,713 — 152,067 Interest expense (60,971 ) 17,492 (50,708 ) — (94,187 ) Foreign currency gains/(losses) 122 (283 ) (1,693 ) — (1,854 ) Other income/(expense), net (13,538 ) 106 9,566 — (3,866 ) Equity in net income of unconsolidated subsidiaries (1,236 ) — 71,615 — 70,379 Earnings in investments in subsidiaries 223,347 — — (223,347 ) — Income/(loss) from operations before taxes 85,025 117,368 143,493 (223,347 ) 122,539 Income taxes (benefit) (17,288 ) 14,669 17,934 — 15,315 Net (income)/loss attributable to noncontrolling interests — — (4,911 ) — (4,911 ) Net income/(loss) attributable to Darling $ 102,313 $ 102,699 $ 120,648 $ (223,347 ) $ 102,313 Condensed Consolidating Statements of Operations For the year ended January 2, 2016 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Net sales $ 475,213 $ 1,363,279 $ 1,759,800 $ (200,846 ) $ 3,397,446 Cost and expenses: Cost of sales and operating expenses 369,928 1,108,864 1,376,079 (200,846 ) 2,654,025 Selling, general and administrative expenses 122,509 55,691 144,374 — 322,574 Depreciation and amortization 34,889 98,400 136,615 — 269,904 Acquisition and integration costs 3,177 — 5,122 — 8,299 Total costs and expenses 530,503 1,262,955 1,662,190 (200,846 ) 3,254,802 Operating income (55,290 ) 100,324 97,610 — 142,644 Interest expense (60,945 ) 18,839 (63,424 ) — (105,530 ) Foreign currency gains/(losses) (123 ) (1,649 ) (3,139 ) — (4,911 ) Other income/(expense), net (22,455 ) 435 15,181 — (6,839 ) Equity in net income of unconsolidated subsidiaries — — 73,416 — 73,416 Earnings in investments in subsidiaries 198,371 — — (198,371 ) — Income/(loss) from operations before taxes 59,558 117,949 119,644 (198,371 ) 98,780 Income taxes (benefit) (18,973 ) 16,121 16,353 — 13,501 Net (income)/loss attributable to noncontrolling interests — — (6,748 ) — (6,748 ) Net income/(loss) attributable to Darling $ 78,531 $ 101,828 $ 96,543 $ (198,371 ) $ 78,531 Condensed Consolidating Statements of Operations For the year ended January 3, 2015 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Net sales $ 557,316 $ 1,620,054 $ 2,063,310 $ (284,237 ) $ 3,956,443 Cost and expenses: Cost of sales and operating expenses 421,883 1,330,038 1,655,487 (284,237 ) 3,123,171 Selling, general and administrative expenses 145,258 54,070 175,252 — 374,580 Depreciation and amortization 31,183 83,957 154,377 — 269,517 Acquisition costs 20,410 — 4,257 — 24,667 Total costs and expenses 618,734 1,468,065 1,989,373 (284,237 ) 3,791,935 Operating income (61,418 ) 151,989 73,937 — 164,508 Interest expense (97,912 ) 21,231 (58,554 ) (181 ) (135,416 ) Foreign currency gains/(losses) (12,244 ) (417 ) (887 ) — (13,548 ) Other income/(expense), net (3,717 ) (19 ) 3,854 181 299 Equity in net income of unconsolidated subsidiary — — 65,609 — 65,609 Earnings in investments in subsidiaries 223,790 — — (223,790 ) — Income/(loss) from operations before taxes 48,499 172,784 83,959 (223,790 ) 81,452 Income taxes (benefit) (15,716 ) 17,534 11,323 — 13,141 Net (income)/loss attributable to noncontrolling interests — — (4,096 ) — (4,096 ) Net income/(loss) attributable to Darling $ 64,215 $ 155,250 $ 68,540 $ (223,790 ) $ 64,215 Condensed Consolidating Statements of Comprehensive Income/(Loss) For the year ended December 31, 2016 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Net income $ 107,224 $ 102,699 $ 120,648 $ (223,347 ) $ 107,224 Other comprehensive income/(loss), net of tax: Foreign currency translation — — (5,593 ) — (5,593 ) Pension adjustments 1,766 — (2,782 ) — (1,016 ) Corn option derivative adjustments 625 — — — 625 Total other comprehensive income, net of tax 2,391 — (8,375 ) — (5,984 ) Total comprehensive income/(loss) 109,615 102,699 112,273 (223,347 ) 101,240 Comprehensive income attributable to noncontrolling interests — — 3,015 — $ 3,015 Comprehensive income/(loss) attributable to Darling $ 109,615 $ 102,699 $ 109,258 $ (223,347 ) $ 98,225 Condensed Consolidating Statements of Comprehensive Income/(Loss) For the year ended January 2, 2016 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Net income $ 85,279 $ 101,828 $ 96,543 $ (198,371 ) $ 85,279 Other comprehensive income (loss), net of tax: Foreign currency translation — — (162,436 ) — (162,436 ) Pension adjustments 83 109 4,010 — 4,202 Corn option derivative adjustments 1,767 — — — 1,767 Total other comprehensive income, net of tax 1,850 109 (158,426 ) — (156,467 ) Total comprehensive income (loss) $ 87,129 $ 101,937 $ (61,883 ) $ (198,371 ) $ (71,188 ) Comprehensive income attributable to noncontrolling interests — — 9,139 — 9,139 Comprehensive income/(loss) attributable to Darling $ 87,129 $ 101,937 $ (71,022 ) $ (198,371 ) $ (80,327 ) Condensed Consolidating Statements of Comprehensive Income/(Loss) For the year ended January 3, 2015 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Net income $ 68,311 $ 155,250 $ 68,540 $ (223,790 ) $ 68,311 Other comprehensive income (loss), net of tax: Foreign currency translation — — (119,684 ) — (119,684 ) Pension adjustments (11,844 ) (34 ) (8,503 ) — (20,381 ) Natural gas swap derivative adjustments (113 ) — — — (113 ) Corn option derivative adjustments (1,259 ) — — — (1,259 ) Total other comprehensive income, net of tax (13,216 ) (34 ) (128,187 ) — (141,437 ) Total comprehensive income (loss) $ 55,095 $ 155,216 $ (59,647 ) $ (223,790 ) $ (73,126 ) Comprehensive income attributable to noncontrolling interests — — 10,296 — 10,296 Comprehensive income/(loss) attributable to Darling $ 55,095 $ 155,216 $ (69,943 ) $ (223,790 ) $ (83,422 ) Condensed Consolidating Statements of Cash Flows For the year ended December 31, 2016 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Cash flows from operating activities: Net income $ 107,224 $ 102,699 $ 120,648 $ (223,347 ) $ 107,224 Earnings in investments in subsidiaries (223,347 ) — — 223,347 — Other operating cash flows 317,040 (100,970 ) 67,742 — 283,812 Net cash provided/(used) by operating activities 200,917 1,729 188,390 — 391,036 Cash flows from investing activities: Capital expenditures (51,330 ) (91,340 ) (100,853 ) — (243,523 ) Acquisitions, net of cash acquired — — (8,511 ) — (8,511 ) Investment in subsidiaries and affiliates — (12,754 ) — 12,754 — Note receivable from affiliates — 103,056 (103,056 ) — — Gross proceeds from sale of property, plant and equipment and other assets 2,784 1,070 3,475 — 7,329 Proceeds from insurance settlements — — 1,537 — 1,537 Payments related to routes and other intangibles — — (23 ) — (23 ) Net cash provide/(used) in investing activities (48,546 ) 32 (207,431 ) 12,754 (243,191 ) Cash flows from financing activities: Proceeds from long-term debt — — 36,327 — 36,327 Payments on long-term debt (143,935 ) — (60,493 ) — (204,428 ) Borrowings from revolving credit facility 94,000 — 5,276 — 99,276 Payments on revolving credit facility (94,000 ) — (10,028 ) — (104,028 ) Net overdraft financing — — 1,071 — 1,071 Deferred loan costs (3,879 ) — — — (3,879 ) Issuance of common stock 188 — — — 188 Repurchase of treasury stock (5,000 ) — — — (5,000 ) Contributions from parent — — 12,754 (12,754 ) — Minimum withholding taxes paid on stock awards (1,718 ) — (125 ) — (1,843 ) Distributions to noncontrolling interests — — (1,552 ) — (1,552 ) Net cash provided/(used) in financing activities (154,344 ) — (16,770 ) (12,754 ) (183,868 ) Effect of exchange rate changes on cash and cash equivalent — — (6,297 ) — (6,297 ) Net increase/(decrease) in cash and cash equivalents (1,973 ) 1,761 (42,108 ) — (42,320 ) Cash and cash equivalents at beginning of year 3,443 3,993 149,448 — 156,884 Cash and cash equivalents at end of year $ 1,470 $ 5,754 $ 107,340 $ — $ 114,564 Condensed Consolidating Statements of Cash Flows For the year ended January 2, 2016 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Cash flows from operating activities: Net income/(loss) $ 85,279 $ 101,828 $ 96,543 $ (198,371 ) $ 85,279 Earnings in investments in subsidiaries (198,371 ) — — 198,371 — Other operating cash flows 250,597 (53,098 ) 138,181 — 335,680 Net cash provided by operating activities 137,505 48,730 234,724 — 420,959 Cash flows from investing activities: Capital expenditures (46,574 ) (91,702 ) (91,572 ) — (229,848 ) Acquisitions, net of cash acquired — — (377 ) — (377 ) Investment in subsidiaries and affiliates (20 ) (45,103 ) 29,541 15,582 — Note receivable from affiliates — 76,019 (76,019 ) — — Gross proceeds from sale of property, plant and equipment and other assets 1,035 1,154 1,651 — 3,840 Proceeds from insurance settlements 71 490 — — 561 Payments related to routes and other intangibles — — (3,845 ) — (3,845 ) Net cash provided/(used) in investing activities (45,488 ) (59,142 ) (140,621 ) 15,582 (229,669 ) Cash flows from financing activities: Proceeds from long-term debt — — 590,745 — 590,745 Payments on long-term debt (16,111 ) (55 ) (593,089 ) — (609,255 ) Borrowings from revolving credit facility 25,000 — 53,244 — 78,244 Payments on revolving credit facility (90,000 ) — (76,755 ) — (166,755 ) Net overdraft financing — — (1,261 ) — (1,261 ) Deferred loan costs (7,295 ) — (10,015 ) — (17,310 ) Issuances of common stock 171 — — — 171 Repurchase of treasury stock (5,912 ) — — — (5,912 ) Contributions from parent — — 15,582 (15,582 ) — Minimum withholding taxes paid on stock awards (4,874 ) — — — (4,874 ) Deductions to noncontrolling interest — — (87 ) — (87 ) Distributions to noncontrolling interests — — (3,295 ) — (3,295 ) Net cash provided/(used) in financing activities (99,021 ) (55 ) (24,931 ) (15,582 ) (139,589 ) Effect of exchange rate changes on cash and cash equivalents — — (3,601 ) — (3,601 ) Net increase/(decrease) in cash and cash equivalents (7,004 ) (10,467 ) 65,571 — 48,100 Cash and cash equivalents at beginning of year 10,447 14,460 83,877 — 108,784 Cash and cash equivalents at end of year $ 3,443 $ 3,993 $ 149,448 $ — $ 156,884 Condensed Consolidating Statements of Cash Flows For the year ended January 3, 2015 (in thousands) Parent Guarantors Non-guarantors Eliminations Consolidated Cash flows from operating activities: Net income/(loss) $ 68,311 $ 155,250 $ 68,540 $ (223,790 ) $ 68,311 Earnings in investments in subsidiaries (223,790 ) — — 223,790 — Other operating cash flows 226,120 (34,238 ) 14,979 — 206,861 Net cash provided/(used) by operating activities 70,641 121,012 83,519 — 275,172 Cash flows from investing activities: Capital expenditures (39,248 ) (84,299 ) (105,371 ) — (228,918 ) Acquisitions, net of cash acquired — (19,394 ) (2,075,006 ) — (2,094,400 ) Investment in subsidiaries and affiliates (1,483,007 ) (1,442,788 ) (440,619 ) 3,366,414 — Note receivable from affiliates — (204,074 ) 204,074 — — Gross proceeds from sale of property, plant and equipment and other assets 1,522 5,155 2,585 — 9,262 Proceeds from insurance settlements 1,350 200 — — 1,550 Payments related to routes and other intangibles (9,640 ) — (1,648 ) — (11,288 ) Net cash provided/(used) in investing activities (1,529,023 ) (1,745,200 ) (2,415,985 ) 3,366,414 (2,323,794 ) Cash flows from financing activities: Proceeds from long-term debt 1,100,000 — 742,184 — 1,842,184 Payments on long-term debt (264,500 ) (87 ) (69,175 ) — (333,762 ) Borrowing from revolving credit facility 122,445 — 47,698 — 170,143 Payments on revolving credit facility (297,445 ) — (54,144 ) — (351,589 ) Net overdraft financing — — 4,077 — 4,077 Deferred loan costs (41,748 ) — (3,475 ) — (45,223 ) Issuances of common stock 416 — — — 416 Contributions from parent — 1,632,618 1,733,796 (3,366,414 ) — Minimum withholding taxes paid on stock awards (10,026 ) — — — (10,026 ) Excess tax benefits from stock-based compensation 2,420 — — — 2,420 Addition of noncontrolling interest — — 1,201 — 1,201 Distributions to noncontrolling interests — — (4,272 ) — (4,272 ) Net cash provided/(used) in financing activities 611,562 1,632,531 2,397,890 (3,366,414 ) 1,275,569 Effect of exchange rate changes on cash and cash equivalents — — 10,980 — 10,980 Net increase/(decrease) in cash and cash equivalents (846,820 ) 8,343 76,404 — (762,073 ) Cash and cash equivalents at beginning of year 857,267 6,117 7,473 — 870,857 Cash and cash equivalents at end of year $ 10,447 $ 14,460 $ 83,877 $ — $ 108,784 |