UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number
0-24620
DARLING INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
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)
(972) 717-0300
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report(s)), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
The number of shares outstanding of the Registrant's common stock, $0.01
par value, as of August 7, 1997 was 5,175,784.
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED JUNE 28, 1997
TABLE OF CONTENTS
Page No.
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets -
June 28, 1997 (unaudited) and December 28, 1996................... 3
Consolidated Statements of Operations (unaudited) -
Three Months and Six Months Ended June 28, 1997 and June 29, 1996.. 4
Consolidated Statements of Cash Flows (unaudited) -
Six Months Ended June 28, 1997 and June 29, 1996.................. 5
Notes to Consolidated Financial Statements (unaudited).............. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ................................ 9
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS .................................................. 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................. 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................... 14
Signatures ....................................................... 16
Index to Exhibits.................................................. 17
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for certain forward-looking statements. Certain matters discussed
in the Form 10-Q could be characterized as forward-looking statements. Such
forward-looking statements involve important risks and uncertainties that
could cause actual results to differ materially from those expressed in
such forward-looking statements.
Page 2
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 28, 1997 and December 28, 1996
(in thousands, except shares and per share data)
June 28, December 28,
1997 1996
(unaudited)
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,158 $ 12,956
Accounts receivable, principally trade, less
allowance of $294 in 1997 and $302 in 1996 32,314 35,966
Inventories 11,830 12,643
Prepaid expenses 3,777 1,493
Deferred income tax assets 5,066 6,184
Other 342 484
Total current assets 59,487 69,726
Property, plant and equipment, less accumulated depreciation
of $68,390 at June 28, 1997 and $55,973 at December 28, 1996 169,880 175,786
Collection routes and contracts, less accumulated amortization
of $6,149 at June 28, 1997 and $3,222 at December 28, 1996 59,379 59,940
Goodwill, less accumulated amortization of $528
at June 28, 1997 and $293 at December 28, 1996 20,624 19,905
Other assets 5,397 4,288
$314,767 $329,645
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,113 $ 15,598
Accounts payable, principally trade 22,943 27,732
Accrued expenses 30,935 30,118
Accrued interest 528 4,293
Total current liabilities 59,519 77,741
Long-term debt, less current portion 135,113 138,173
Other noncurrent liabilities 24,226 20,376
Deferred income taxes 27,481 29,322
Total liabilities 246,339 265,612
Stockholders' equity
Common stock, $.01 par value;
10,000,000 shares authorized;
5,168,689 and 5,151,979 shares issued and outstanding at
June 28, 1997 and at December 28, 1996, respectively 52 52
Additional paid-in capital 34,766 34,570
Retained earnings 33,610 29,411
Total stockholders' equity 68,428 64,033
Contingencies (note 3)
$314,767 $329,645
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months and six months ended June 28, 1997 and
June 29, 1996
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
(unaudited) (unaudited)
-------- -------- ---------- --------
Net sales $128,796 $114,253 $254,605 $223,994
Costs and expenses:
Cost of sales and operating expenses 103,259 91,071 205,623 178,606
Selling, general and administrative expenses 7,529 7,450 18,726 14,621
Depreciation and amortization 8,241 6,509 16,216 12,626
Total costs and expenses 119,029 105,030 240,565 205,853
Operating income 9,767 9,223 14,040 18,141
Other income (expense):
Interest expense (3,699) (3,089) (7,354) (6,094)
Other, net 143 (4) 247 428
Total other income (expense) (3,556) (3,093) (7,107) (5,666)
Income before income taxes 6,211 6,130 6,933 12,475
Income tax expense 2,399 2,517 2,734 4,930
Net earnings $ 3,812 $ 3,613 $ 4,199 $ 7,545
Net earnings per common share $ 0.70 $ 0.65$ 0.77$ 1.36
The accompanying notes are an integral part of these
consolidated financial statements.
Page 4
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June
28, 1997 and June 29, 1996
(in thousands)
Six Months Ended
June 28, June 29,
1997 1996
(unaudited)
------------ ----------
Cash flows from operating activities:
Net earnings $ 4,199 $ 7,545
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 16,216 12,626
Deferred income tax expense (benefit) (723) 234
Loss (gain) on sales of assets (622) 144
Changes in operating assets and liabilities, net of effects from
acquisitions:
Accounts receivable 3,652 (1,335)
Inventories and prepaid expenses (1,471) 1,734
Accounts payable and accrued expenses (3,133) 1,585
Accrued interest (3,765) 57
Other 3,746 (1,270)
Net cash provided by operating activities 18,099 21,320
Cash flows from investing activities:
Recurring capital expenditures (10,289) (11,505)
Capital expenditures related to acquisitions (1,001) (288)
Cash received upon purchase of stock of Standard Tallow - 2,375
Net proceeds from sale of property, plant and equipment
and other assets 5,051 185
Payments related to routes and other intangibles (3,607) (87)
Net cash used in investing activities (9,846) (9,320)
Cash flows from financing activities:
Proceeds from long-term debt 201,044 14,719
Payments on long-term debt (214,589) (28,899)
Contract payments (737) (71)
Deferred loan costs (965) -
Issuance of common stock 196 564
Net cash used in financing activities (15,051) (13,687)
Net decrease in cash and cash equivalents (6,798) (1,687)
Cash and cash equivalents at beginning of period 12,956 11,649
Cash and cash equivalents at end of period $ 6,158 $ 9,962
The accompanying notes are an integral part of these
consolidated financial statements.
Page 5
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 28, 1997
(unaudited)
(1) General
The accompanying consolidated financial statements for the three month
and six month periods ended June 28, 1997 and June 29, 1996 have been
prepared by Darling International Inc. (Company) 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) which 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. Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to
such rules and regulations. However, management of the Company believes
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 consolidated financial
statements contained in the Company's Form 10-K for the fiscal year ended
December 28, 1996.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
(b) 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 for the 52 weeks ended December 28,
1996, the 13 and 26 weeks ended June 28, 1997, and the 13 and 26
weeks ended June 29, 1996.
(c) Earnings Per Common Share
Primary income per common share is computed by dividing net income
attributable to outstanding common stock by the weighted average
number of common stock shares outstanding during the period
increased by dilutive common equivalent shares (stock options)
determined using the treasury stock method. Primary weighted
average equivalent shares are determined based on the average
market price exceeding the exercise price of the stock options.
Fully diluted weighted average equivalent shares are determined
based on the higher of the average or ending market price
exceeding the exercise price of the stock options.
Page 6
(3) Contingencies
(a) ENVIRONMENTAL
Blue Earth
During July, 1997, the Company, the United States, and the State of
Minnesota received Court approval of the proposed settlement to
resolve the government's criminal claims relating to environmental
law violations at the Company's Blue Earth rendering plant. The
Court approved the Plea Agreement under which Darling has paid
$2,700,000 in criminal fines and penalties, as well as $1.0 million
in restitution and remediation. A Consent Decree (the "Decree") to
resolve all state and federal civil and administrative claims
related to the Blue Earth allegations was lodged during July.
Pursuant to the Decree, subject to final Court approval, Darling
will pay $300,000 in civil and administrative penalties, and will
undertake other requirements of the Decree. The Company recorded a
provision for loss contingency of $6,100,000 during Fiscal 1996 to
cover the expected cost of the settlement as well as legal,
environmental and other related costs.
Chula Vista
The Company is the owner of an undeveloped property located in
Chula Vista, California (the "Site"). A rendering plant was
operated on the Site until 1982. From 1959 to 1978, a portion of
the Site was used as an industrial waste disposal facility which
was closed pursuant to Closure Order No. 80-06 issued by the State
of California Regional Water Quality Control Board for the San
Diego Region (the "RWQCB"). The Site has been listed by the State
of California as a site for which expenditures for removal and
remedial actions may be made by the State pursuant to the
California Hazardous Substances Account Act, California Health &
Safety Code Section 25300 et seq. Technical consultants retained by
the Company have conducted various investigations of the
environmental conditions at the Site, and in 1996, requested that
the RWQCB issue a "no further action" letter with respect to the
Site. The RWQCB has not yet taken any formal action in response to
such request.
(b) LITIGATION
Petruzzi
An antitrust class action suit was filed in 1986 by Petruzzi IGA
Supermarkets in the United States District Court for the Middle
District of Pennsylvania (the "Class Action Suit") seeking damages
from the Company. On September 14, 1995, the Company entered into a
settlement agreement providing for the disposal of all claims in
the Class Action Suit. The settlement agreement was approved by the
District Court on December 20, 1995. The District Court has yet to
rule on the petitions for attorneys' fees.
Other Litigation
The Company is also a party to several other lawsuits, claims and
loss contingencies incidental to its business.
Page 7
The Company has established loss reserves for environmental and
other matters as a result of the matters discussed above. Although
the ultimate liability cannot be determined with certainty,
management of the Company believes that reserves for contingencies
are reasonable and sufficient based upon present governmental
regulations and information currently available to management. The
Company estimates the range of possible losses related to
environmental and litigation matters, based on certain assumptions,
is between $9,000,000 and $18,100,000 at June 28, 1997.
Additionally, the Company maintains reserves in connection with
potential claims under its workers compensation and auto liability
policies which are partially self-insured by the Company. The
accrued expenses and other noncurrent liabilities classifications
in the Company's consolidated balance sheets include reserves for
insurance, environmental and litigation contingencies of
$21,556,000 and $20,847,000 at June 28, 1997 and December 28, 1996,
respectively. There can be no assurance, however, that final costs
will not exceed current estimates. The Company believes that any
additional liability relative to such lawsuits and claims which may
not be covered by insurance would not likely have a material
adverse effect on the Company's financial position, although it
could potentially have a material impact on the results of
operations in any one year.
Page 8
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 28, 1997
PART I
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion summarizes information with respect to the
liquidity and capital resources of the Company at June 28, 1997 and factors
affecting its results of operations for the three months and six months ended
June 28, 1997 and the comparable periods ended June 29, 1996.
RESULTS OF OPERATIONS
Three Months Ended June 28, 1997 Compared to Three Months Ended June 29, 1996
GENERAL
The Company recorded net earnings of $3.8 million for the second quarter of
the fiscal year ending January 3, 1998 ("Fiscal 1997"), as compared to net
earnings of $3.6 million for the second quarter of the fiscal year ended
December 28, 1996 ("Fiscal 1996"). Operating income increased from $9.2 million
in the second quarter of Fiscal 1996 to $9.8 million in the second quarter of
Fiscal 1997. The increase in operating income was primarily attributable to the
acquisitions of Standard Tallow Corporation ("Standard Tallow") and
International Processing Corporation ("IPC") and a $1.9 million insurance
settlement of certain property and casualty claims with past insurers.
NET SALES
The Company collects and processes animal processing by-products (fat,
bones and offal), used restaurant cooking oil, and bakery by-products to produce
finished products of tallow, meat and bone meal, yellow grease and dried bakery
product. Sales are significantly affected by finished goods prices, quality of
raw material, and volume of raw material. Net sales include the sales of
produced finished goods as well as finished goods purchased for resale, which
constitute less than 10% of the total. During the second quarter of Fiscal 1997,
net sales increased 12.7% to $128.8 million as compared to $114.3 million during
the second quarter of Fiscal 1996. This increase in sales in the second quarter
of Fiscal 1997 was due primarily to the acquisitions of Standard Tallow and IPC.
Decreases in the volume of raw materials processed were offset by increases in
finished goods prices compared to a year earlier.
COST OF SALES AND OPERATING EXPENSES
Cost of sales and operating expenses includes prices paid to raw material
suppliers, the cost of product purchased for resale, and the cost to collect and
process raw material. The Company utilizes both fixed and formula pricing
methods for the purchase of raw materials. Fixed prices are adjusted where
possible in response to changes in finished goods market conditions, while raw
materials purchased under formula prices are correlated with specific finished
goods prices.
During the second quarter of Fiscal 1997, cost of sales and operating
expenses increased by $12.2 million (13.4%) to $103.3 million as compared to
$91.1 million during the second quarter of Fiscal 1996. Cost of sales and
operating expenses grew due to the acquisitions of Standard Tallow and IPC.
Page 9
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling, general and administrative costs remained flat at $7.5 million
during the second quarter of Fiscal 1997 as compared to the second quarter of
Fiscal 1996. A $1.9 million insurance settlement of certain property and
casualty claims from past insurers was offset by increases related to the
acquisitions of Standard Tallow and IPC.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization charges increased by $1.7 million to $8.2
million during the second quarter of Fiscal 1997 as compared to $6.5 million
during the second quarter of Fiscal 1996. This increase was due to the
acquisitions of Standard Tallow and IPC as well as additional depreciation
related to fixed asset additions. The Company adopted Fresh Start Accounting in
1994. Under this method of accounting, the assets acquired prior to December
1994 were restated at fair market value and depreciated over estimated remaining
lives of 5-15 years.
INTEREST EXPENSE
Interest expense increased by $0.6 million from $3.1 million during the
second quarter of Fiscal 1996 to $3.7 million during the second quarter of
Fiscal 1997 due to interest incurred on acquisition indebtedness.
INCOME TAXES
The tax expense of $2.4 million for the second quarter of Fiscal 1997
consists of $2.2 million of federal tax expense and $0.2 million for various
state taxes. Tax expense for the second quarter of Fiscal 1996 was $2.5 million.
CAPITAL EXPENDITURES
The Company made recurring capital expenditures of $4.9 million during the
second quarter of Fiscal 1997 compared to capital expenditures of $6.3 million
during the second quarter of Fiscal 1996. Capital expenditures related to
acquisitions were $700,000 for the quarter compared to no expenditures for the
same period in 1996.
Six Months Ended June 28, 1997 Compared to Six Months Ended June 29, 1996
GENERAL
The Company recorded net earnings of $4.2 million for the first six months
of Fiscal 1997, as compared to net earnings of $7.5 million for the first six
months of Fiscal 1996. Operating income decreased from $18.1 million in the
first six months of Fiscal 1996 to $14.0 million in the first six months of
Fiscal 1997. The decrease in operating income was primarily due an increase of
$3.6 million in depreciation and amortization expense related to acquisitions
and capital expenditures, and to a $1.7 million expenditure related to the buy
back of stock options of the former president of the Company during the first
quarter of Fiscal 1997. These were offset by a $1.9 million insurance settlement
of certain property and casualty claims with past insurers and operating income
contributed by the acquisitions of Standard Tallow and IPC.
Page 10
NET SALES
During the first six months of Fiscal 1997, net sales increased by $30.6
million (13.7%) to $254.6 million as compared to $224.0 million during the first
six months of Fiscal 1996.
This increase in sales in the first six months of Fiscal 1997 was due
primarily to the acquisitions of Standard Tallow and IPC. Decreases in the
volume of raw materials processed were offset by increases in finished goods
prices compared to a year earlier.
COST OF SALES AND OPERATING EXPENSES
During the first six months of Fiscal 1997, cost of sales and operating
expenses increased $27.0 million (15.1%) to $205.6 million as compared to $178.6
million during the first six months of Fiscal 1996. Cost of sales and operating
expenses grew due to the acquisitions of Standard Tallow and IPC.
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling, general and administrative costs were $18.7 million during the
first six months of Fiscal 1997, a $4.1 million increase from $14.6 million for
the first six months of Fiscal 1996. Approximately $3.9 million of the increase
was due to the acquisitions of Standard Tallow and IPC. An increase of $1.7
million related to the repurchase of stock options held by the former president
of the Company was offset by a $1.9 million refund from property and casualty
insurance claims.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization charges increased by $3.6 million to $16.2
million during the first six months of Fiscal 1997 as compared to $12.6 million
during the first six months of Fiscal 1996. This increase was due to the
acquisitions of Standard Tallow and IPC as well as the additional depreciation
on fixed asset additions.
INTEREST EXPENSE
Interest expense increased by $1.3 million from $6.1 million during the
first six months of Fiscal 1996 to $7.4 million during the first six months of
Fiscal 1997 due to interest charges incurred on acquisition indebtedness.
INCOME TAXES
The tax expense of $2.7 million for the first six months of Fiscal 1997
consists of $2.5 million of federal tax expense and $0.2 million for various
state taxes. Tax expense for the first six months of Fiscal 1996 was $4.9
million.
CAPITAL EXPENDITURES
The Company made recurring capital expenditures of $10.3 million during the
first six months of Fiscal 1997 compared to capital expenditures of $11.5
million during the first six months of Fiscal 1996. Capital expenditures related
to acquisitions were $1.0 million for the first six months of 1997 compared to
$0.3 million for the same period in 1996.
Page 11
LIQUIDITY AND CAPITAL RESOURCES
Effective June 5, 1997, the Company entered into a Credit Agreement
(the "Credit Agreement") which provides for borrowings in the form of a
$50,000,000 Term Loan and $175,000,000 Revolving Credit Facility. As of June 28,
1997, the Company was in compliance with all provisions of the Credit Agreement.
The Term Loan provides for $50,000,000 of borrowing. The Term Loan
bears interest, payable monthly, at LIBOR (5.8125% at June 28, 1997) plus a
margin (the "Credit Margin") (1.25% at June 28, 1997) which floats based on the
achievement of certain financial ratios. The Term Loan is payable by the Company
in quarterly installments of $1,250,000 commencing on June 30, 1997 through
March 31, 1999; $2,500,000 commencing on June 30, 1999 through March 31, 2002;
and an installment of $10,000,000 due on June 30, 2002. As of June 28, 1997,
$50,000,000 was outstanding under the Term Loan.
The Revolving Credit Facility provides for borrowings up to a maximum
of $175,000,000 with sublimits available for letters of credit and a swingline.
Outstanding borrowings on the Revolving Credit Facility bear interest, payable
monthly, at various LIBOR rates (ranging from 5.6875% to 5.8125% at June 28,
1997) plus the Credit Margin as well as portions at a Base Rate (8.50% at June
28, 1997) or, for swingline advances, at a Base Rate (8.50% at June 28, 1997).
Additionally, the Company must pay a commitment fee equal to 0.25% per annum on
the unused portion of the Revolving Credit Facility. On June 27, 1997,
$73,439,812 of the Revolving Credit Facility was used to liquidate the
outstanding 11% subordinated note obligations at par ($69,976,000 in principal
and $3,463,812 in accrued interest) pursuant to an optional redemption under the
terms of the subordinated note indenture. The Revolving Credit Facility matures
on June 30, 2002. As of June 28, 1997, $90,000,000 was outstanding under the
Revolving Credit Facility. As of June 28, 1997, the Company had outstanding
irrevocable letters of credit aggregating $8,457,398.
Effective June 27, 1997, the Company entered into interest rate swap
transactions whereby the interest obligations on $70,000,000 of Credit Agreement
floating rate debt was exchanged for fixed rate contracts terminating June 27,
2002. The fixed rate contracts bear interest, payable quarterly, at an average
rate of 6.60% plus the Credit Margin.
On June 28, 1997, the Company had a working capital ratio of 1 to 1,
compared to a working capital deficit of $8.0 million and a working capital
ratio of 0.90 to 1 on December 28, 1996. Net cash provided by operating
activities has decreased by $3.2 million from $21.3 million during the first six
months of Fiscal 1996 to $18.1 million during the first six months of Fiscal
1997. The Company believes that cash from operations and current cash balances,
together with the undrawn balance from the Company's loan agreements, will be
sufficient to satisfy the Company's planned capital requirements.
ACQUISITIONS
The Company periodically makes acquisitions which on a stand-alone
basis are not considered significant acquisitions for disclosure purposes.
During the first six months of Fiscal 1997, the Company made acquisitions
totaling $4.2 million which included goodwill acquired of $821,000.
Page 12
ACCOUNTING MATTERS
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, Earnings Per Share. SFAS No. 128 is effective for both interim and
annual periods ending after December 15, 1997. This Statement specifies the
computation, presentation, and disclosure requirements for earnings per share
(EPS) for entities with publicly held common stock. It replaces the presentation
of primary EPS with a presentation of basic EPS and fully diluted EPS with
diluted EPS. Basic EPS excludes all dilution associated with common stock
equivalents while diluted EPS, like fully diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Although early application of
SFAS No. 128 application is not permitted, proforma EPS disclosure for periods
prior to adoption is permitted. Pro forma EPS for the three months and six
months ended June 28, 1997 and June 29, 1996 are as follows:
Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
---------------------------------------------------------
(unaudited)
Basic EPS $ 0.74 $ 0.71 $ 0.81 $1.48
Diluted EPS $ 0.70 $ 0.65 $ 0.77 $1.36
Page 13
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 28, 1997
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information required by this item is included on pages 7 and 8 of this
report and is incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fiscal quarter ended June 28, 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits
Exhibits No. Description
3.1* Restated Articles of Incorporation.
3.2 Amended and Restated Bylaws, dated March 10, 1994 and March
31, 1995.
10.1** Credit Agreement, dated as of June 5, 1997, among Darling
International Inc., BankBoston, N.A., Comerica Bank, Credit
Lyonnais New York Branch, and Wells Fargo Bank (Texas),
National Association as Co-Agents, and other banks as named
therein.
10.2 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Credit Lyonnais and Darling
International Inc. dated as of June 6, 1997 related to
interest rate swap transaction.
10.3 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Wells Fargo Bank, N.A. and
Darling International Inc. dated as of June 6, 1997 related
to interest rate swap transaction.
10.4 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between BankBoston, N.A. and Darling
International Inc. dated as of June 26, 1997 related to
interest rate swap transaction.
11 Statement re computation of per share earnings.
27 Financial Data Schedule
Page 14
* Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-79478).
** Incorporated by reference Form 8-K filed June 5, 1997.
REPORTS ON FORM 8-K
The Registrant filed the following Current Report on Form 8-K
during the quarter ended June 28, 1997: Current Report on Form
8-K dated June 5, 1997 including information regarding a
Credit Agreement the Company entered into providing for
borrowings in the form of a $50,000,000 Term Loan and a
$175,000,000 Revolving Credit Facility.
Page 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DARLING INTERNATIONAL INC.
Registrant
Date: August 12, 1997 By:. /s/ Dennis B. Longmire
---------------------- ---------------------------------
Dennis B. Longmire
Chairman and
Chief Executive Officer
Date: August 12, 1997 By: /s/ John R Witt
---------------------- ---------------------------------
John R. Witt
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Page 16
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 28, 1997
INDEX TO EXHIBITS
Exhibits No. Description Page
3.1* Restated Articles of Incorporation.
3.2 Amended and Restated Bylaws, dated March 10, 1994 and March 31,
1995.
10.1** Credit Agreement, dated as of June 5, 1997, among
Darling International Inc., BankBoston, N.A., Comerica Bank,
Credit Lyonnais New York Branch, and Wells Fargo Bank (Texas),
National Association as Co-Agents, and other banks as named
therein.
10.2 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Credit Lyonnais and Darling
International Inc. dated as of June 6, 1997 related to interest
rate swap transaction.
10.3 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Wells Fargo Bank, N.A. and
Darling International Inc. dated as of June 6, 1997 related to
interest rate swap transaction.
10.4 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between BankBoston, N.A. and Darling
International Inc. dated as of June 26, 1997 related to
interest rate swap transaction.
11 Statement re computation of per share earnings. 18
27 Financial Data Schedule
* Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (Registration No. 33-79478).
** Incorporated by reference Form 8-K filed June 5, 1997.
Page 17
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
The following table details the computation of primary and fully diluted
earnings per common share, in thousands except per share data.
Three Months Ended Six Months Ended
--------------------------- -------------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
============= ============= ============= ===========
Earnings:
Net earnings available to common stock $3,812 $3,613 $4,199 $7,545
====== ======= ====== ======
Shares (Primary):
Weighted average number of
common shares outstanding 5,168 5,114 5,163 5,101
Additional shares assuming exercise of
stock options 277 404 315 435
Average common shares outstanding
and equivalents 5,445 5,518 5,478 5,536
Primary Earnings per common share $ 0.70 $ 0.65 $ 0.77 $ 1.36
====== ======= ====== ======
Shares (Fully Diluted):
Weighted average number of
common shares outstanding 5,168 5,114 5,163 5,101
Additional shares assuming exercise of
stock options 289 408 317 435
Average common shares outstanding
and equivalents 5,457 5,522 5,480 5,536
Fully Diluted Earnings per common share $ 0.70 $ 0.65 $ 0.77 $ 1.36
====== ======= ====== ======
Page 18