UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 29, 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 No.)
251 O'CONNOR RIDGE BLVD., SUITE 300, IRVING, TEXAS 75038
(Address of principal executive offices)
(972) 717-0300
(Registrant's telephone number)
Not applicable
(Former name, address and 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 May 9, 1997, was 5,168,484.
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 29, 1997
TABLE OF CONTENTS
Page No.
PART I: Financial Information
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets . . . . . . . . . . . . 3
March 29, 1997 (unaudited) and December 28, 1996
Consolidated Statements of Operations (unaudited) . . . . . 4
Three Months Ended March 29, 1997 and March 30, 1996
Consolidated Statements of Cash Flows (unaudited) . . . . . 5
Three Months Ended March 29, 1997 and March 30, 1996
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 . . . . . . . . . . . . . . . . 12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS . . . . . . . . . . . . . . . . 12
Item 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . 14
Index to Exhibits . . . . . . . . . . . . . . . . 15
<TABLE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 29, 1997 and December 28, 1996
(in thousands, except shares and per share data)
<CAPTION>
March 29, December 28,
1997 1996
------------- -----------
(unaudited
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,385 $ 12,956
Accounts receivable, principally trade, less allowance
of $291 in 1997 and $302 in 1996 27,792 35,966
Inventories 17,034 12,643
Prepaid expenses 1,812 1,493
Deferred income tax assets 4,896 6,184
Other 381 484
---------- ---------
Total current assets 55,300 69,726
Property, plant and equipment, less accumulated
depreciation of $62,217 at March 29, 1997 and
$55,973 at December 28, 1996 175,466 175,786
Collection routes and contracts, less accumulated
amortization of $4,733 at March 29, 1997 and
$3,222 at December 28, 1996 60,346 59,940
Goodwill, less accumulated amortization of $436
at March 29, 1997 and $293 at December 28, 1996 20,196 19,905
Other assets 3,950 4,288
----------- ---------
$ 315,258 $ 329,645
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 18,098 $ 15,598
Accounts payable, principally trade 20,649 27,732
Accrued expenses 25,856 30,118
Accrued interest 1,958 4,293
---------- --------
Total current liabilities 66,561 77,741
Long-term debt, less current portion 132,624 138,173
Other noncurrent liabilities 23,639 20,376
Deferred income taxes 27,840 29,322
--------- --------
Total liabilities 250,664 265,612
--------- --------
Stockholders' equity
Common stock, $.01 par value; 10,000,000 shares authorized;
5,166,949 and 5,151,979 shares issued and outstanding at
March 29, 1997 and at December 28, 1996, respectively 52 52
Additional paid-in capital 34,745 34,570
Retained earnings 29,797 29,411
--------- --------
Total stockholders' equity 64,594 64,033
--------- --------
Contingencies (note 3)
$ 315,258 $ 329,645
The accompanying notes are an integral part of
these consolidated financial statements.
</TABLE>
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS Three months
ended March 29, 1997 and March 30, 1996
(in thousands, except per share data)
Three Months Ended
March 29, March 30,
1997 1996
--------- --------
(unaudited)
Net sales $ 125,809 $ 109,741
Costs and expenses:
Cost of sales and operating expenses 102,365 87,536
Selling, general and administrative expenses 11,196 7,170
Depreciation and amortization 7,975 6,117
------- -------
Total costs and expenses 121,536 100,823
------- -------
Operating income 4,273 8,918
------- -------
`
Other income (expense):
Interest expense (3,656) (3,005)
Other, net 104 432
------- -------
Total other income (expense) (3,552) (2,573)
------- -------
Income before income taxes 721 6,345
Income tax expense 335 2,414
------- -------
Net earnings $ 386 $ 3,931
======= =======
Net earnings per common share $ 0.07 $ 0.72
===== ======
The accompanying notes are an integral part
of these consolidated financial
statements.
<PAGE>
<TABLE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS Three months
ended March 29, 1997 and March 30, 1996
(in thousands)
<CAPTION>
Three Months Ended
March 29, March 30,
1997 1996
----------- ---------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 386 $ 3,931
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 7,975 6,117
Deferred income tax expense (benefit) (194) 663
Loss on sales of assets 5 49
Changes in assets and liabilities:
Accounts receivable 8,174 910
Inventories and prepaid expenses (4,711) 1,408
Accounts payable and accrued expenses (7,748) (2,475)
Accrued interest (2,335) (1,916)
Other (208) 2,411
------ ------
Net cash provided by operating activities 1,344 11,098
------ ------
Cash flows from investing activities:
Recurring capital expenditures (4,253) (5,182)
Capital expenditures related to acquisitions (1,825) -
Net proceeds from sale of property, plant and equipment and
other assets 73 79
Payments related to routes and other intangibles (2,352) (30)
------ ------
Net cash used in investing activities (8,357) (5,133)
------ ------
Cash flows from financing activities:
Proceeds from long-term debt 27,724 9,653
Payments on long-term debt (30,773) (21,464)
Contract payments 316 (35)
Issuance of common stock 175 37
------ ------
Net cash used in financing activities (2,558) (11,809)
------ ------
Net decrease in cash and cash equivalents (9,571) (5,844)
Cash and cash equivalents at beginning of period 12,956 11,649
------ ------
Cash and cash equivalents at end of period $ 3,385 $ 5,805
====== ======
The accompanying notes are an integral part
of these consolidated financial
statements.
</TABLE>
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 29, 1997
(unaudited)
(1) General
The accompanying consolidated financial statements for the three month
periods ended March 29, 1997 and March 30, 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 as of December 28, 1996, and
include the 13 weeks ended March 29, 1997 and the 13 weeks ended
March 30, 1996.
(c) Income 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 year
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.
(3) Contingencies
(a) ENVIRONMENTAL
Blue Earth
The United States Attorney for the District of Minnesota and the
State of Minnesota since 1992 have been conducting an investigation
of alleged state and federal wastewater violations at the Company's
Blue Earth, Minnesota plant. The Company has fully cooperated with
the government in its investigation and continues to do so. The
Company and the U.S. Attorney have reached a settlement providing
for payment of a total of $4,000,000. This settlement payment is
intended to resolve all federal and state civil, criminal and
administrative claims, through payment of civil and criminal fines
and penalties, as well as funding the restitution, remediation and
community service required as part of the criminal settlement. The
settlement is subject to court approval, and is subject to the
resolution of pending negotiations with the U.S. Environmental
Protection Agency of the terms of a Consent 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.
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 March 29, 1997. The
accrued expenses and other noncurrent liabilities classifications
in the Company's consolidated balance sheets include reserves for
insurance, environmental and litigation contingencies of
$18,726,000 and $20,847,000 at March 29, 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.
(4) Stock Option Repurchase
Pursuant to the Employment Agreement dated as of December 29, 1993
between the Company and the former president of the Company ("Employee"),
the Employee was granted 123,626 options to purchase stock of the company
under the 1993 Flexible Stock Option Plan. The Separation Agreement dated
as of September 24, 1996 between the Employee and the Company provided
that options could be canceled at any time until June 30, 1997, at the
Company's option based upon the closing stock price on the date of the
cancellation.
On February 22, 1997, the Company exercised the right to cancel such
stock options and the Employee received compensation of $1,660,000 upon
such cancellation. This one time payment is reflected in selling, general
and administrative expense during the three months ended March 29, 1997
on the Company's consolidated statements of operations.
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 29, 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 March 29, 1997 and factors
affecting its results of operations for the three months ended March 29, 1997
and March 30, 1996.
RESULTS OF OPERATIONS
Three Months Ended March 29, 1997 Compared to Three Months Ended March 30, 1996
GENERAL
The Company recorded net earnings of $0.4 million for the first quarter of
the fiscal year ending January 3, 1998 ("Fiscal 1997"), as compared to net
earnings of $3.9 million for the first quarter of the 1fiscal year ended
December 28, 1996 ("Fiscal 1996"). Operating income decreased $4.6 million to
$4.3 million in the first quarter of Fiscal 1997 from $8.9 million in the first
quarter of Fiscal 1996. The decrease in operating income was primarily due to a
$1.7 million expenditure related to the buy back of stock options of the former
president of the Company; approximately $1.1 million in higher natural gas
costs; and an increase of $1.9 million in depreciation and amortization expense
primarily related to acquistions and capital expenditures.
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 first quarter of Fiscal 1997,
net sales increased 14.7% to $125.8 million as compared to $109.7 million during
the first quarter of Fiscal 1996.
The increase in net sales in the first quarter of Fiscal 1997, compared
to the prior year, was due primarily to the acquisitions of Standard Tallow
Company ("Standard Tallow") and International Processing Corporation ("IPC").
During the first quarter of Fiscal 1997, the Company's average yellow grease
prices increased 9.5%, tallow prices increased 20.1%, and meat and bone meal
prices increased 14.9% compared to 1996. Improvements in finished goods prices
were partially offset by a decrease in the volume of raw materials processed,
exclusive of the acquisitions. In addition, delays in export shipments
negatively impacted sales in the first quarter.
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 as needed for changes in competition and significant changes in
finished goods market conditions, while raw materials purchased under formula
prices are correlated with specific finished goods prices.
During the first quarter of Fiscal 1997, cost of sales and operating
expenses increased $14.9 million (17.0%) to $102.4 million as compared to $87.5
million during the first quarter of Fiscal 1996. Cost of sales grew due to the
acquisitions of Standard Tallow and IPC. Operating expenses increased as a
result of collecting and processing higher volumes of material due to the
acquisitions and a $1.1 million increase in steam expense attributable to
significantly higher natural gas prices.
SELLING, GENERAL AND ADMINISTRATIVE COSTS
Selling, general and administrative costs were $11.2 million during the
first quarter of Fiscal 1997, a $4.0 million increase from $7.2 million for the
first quarter of Fiscal 1996. Approximately $2.1 million of the increase was
related to the acquisitions of Standard Tallow and IPC. An additional $1.7
million of the increase was related to the repurchase of stock options held by
the former president of the Company, representing 123,626 shares of the
Company's common stock.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization charges increased $1.9 million to $8.0
million during the first quarter of Fiscal 1997 as compared to $6.1 million
during the first quarter of Fiscal 1996. This increase was primarily due to
additional depreciation on fixed asset additions and amortization on intangibles
acquired as a result of the acquisitions of Standard Tallow and IPC. The Company
adopted Fresh Start Accounting in 1994. Under this method of accounting, the
assets acquired prior to December 1994 wee restated at fair market value and
depreciated over estimated remaining lives of 5-15 years.
INTEREST EXPENSE
Interest expense increased $0.7 million from $3.0 million during the
first quarter of Fiscal 1996 to $3.7 million during the first quarter of Fiscal
1997, primarily due to borrowings associated with the acquisitions of Standard
Tallow and IPC.
INCOME TAXES
The income tax expense of $335,000 for the first quarter of Fiscal 1997
consists of $274,000 of federal tax expense and $61,000 for various state taxes.
This is a decrease of $2.1 million from $2.4 million during the first quarter of
Fiscal 1996.
CAPITAL EXPENDITURES
The Company made capital expenditures of $6.1 million, including
capital expenditures associated with acquisitions, during the first quarter of
Fiscal 1997 compared to capital expenditures of $5.2 million during the first
quarter of Fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
Effective May 23, 1995, the Company entered into a Credit Agreement
(the "Credit Agreement") which provides for borrowings in the form of a Term
Loan Facility ("Term Loan Facility"), Revolving Loan Facility ("Revolving Loan
Facility") and an Acquisition Line ("Acquisition Line"). As of March 29, 1997,
the Company was in compliance with all provisions of the Credit Agreement.
The Term Loan Facility bears interest, payable monthly, at LIBOR (5.75%
at March 29, 1997) plus a margin (1.25% at March 29, 1997) which floats
depending on the Company's compliance with certain financial covenants. The Term
Loan Facility is payable by the Company in quarterly installments of $2,000,000
commencing March 31, 1996 through December 31, 1999; and an installment of
$6,000,000 due on March 31, 2000, with the remaining balance due on June 30,
2000. As of March 29, 1997, $36,000,000 was outstanding under the Term Loan
Facility.
The Revolving Loan Facility provides for borrowings up to a maximum of
$25,000,000 with sublimits available for letters of credit and a swingline.
Outstanding borrowings on the Revolving Loan Facility bear interest, payable
monthly, at LIBOR (5.75% at March 29, 1997) plus a margin (1.25% at March 29,
1997) or, for swingline advances, at a Base Rate (8.50% at March 29, 1997).
Additionally, the Company must pay a commitment fee equal to 0.375% on the
unused portion of the Revolving Loan Facility. The Revolving Loan Facility
matures on June 30, 2000. As of March 29, 1997, $3,979,000 was outstanding under
the Revolving Loan Facility. As of March 29, 1997, the Company had outstanding
irrevocable letters of credit aggregating $8,485,523.
The Acquisition Line provides for borrowings to a maximum of
$40,000,000. Outstanding borrowings on the Acquisition Line bear interest,
payable monthly, at LIBOR (5.45% at March 29, 1997) plus a margin (1.375% at
March 29, 1997). Outstanding borrowings under the Acquisition Line as of June
30, 1997 convert to term debt on that date. At that time, the Acquisition Line
is payable by the Company in quarterly installments of $2,500,000 commencing
October 1, 1997 through June 30, 1999; and $5,000,000 commencing October 1, 1999
through June 30, 2000. As of March 29, 1997, $40,000,000 was outstanding under
the Acquisition Line.
All accounts receivable, inventory and certain related intangibles of
the Company are pledged as collateral for borrowings under the Credit Agreement.
The Credit Agreement contains certain terms and covenants, which, among other
matters, restrict the incurrence of additional indebtedness, payment of cash
dividends, and expenditures for capital and environmental needs and requires the
maintenance of certain minimum ratios. As of March 29, 1997, no cash dividends
could be paid to the Company's stockholders pursuant to the Credit Agreement.
The Company has Subordinated Notes outstanding with a face amount of
$69,976,000. The Subordinated Notes bear interest payable semi-annually at 11%
per annum until maturity, July 15, 2000.
On March 29, 1997, the Company had a working capital deficit of $11.3
million and its working capital ratio was 0.83 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. The decrease in working capital is primarily the result of a
$2.5 million increase in current maturities of long-term debt. 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.
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 ended March
29, 1997 and March 30, 1996 are as follows:
Three Months Ended
March 29, March 30,
1997 1996
-------------------------------------
(unaudited)
Basic EPS $0.07 $0.77
===== =====
Diluted EPS $0.07 $0.72
===== =====
ACQUISITIONS
The Company periodically makes acquisitions which on a stand-alone
basis are not considered significant acquisitions for disclosure purposes.
During the first quarter of Fiscal 1997, the Company made acquisitions totaling
$3.0 million which included goodwill acquired of $450,000.
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 29, 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 March 29, 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
<PAGE>
(a) ( Exhibits
Exhibits No. Description
2 * Settlement Agreement, dated December 29, 1993, relating to
the settlement of class action litigation styled IDS Life
Insurance Company, Inc., et al. v. Darling-Delaware Company,
Inc., et al., Case No. 91 C 5166, in the United States
District Court for the Northern District of Illinois.
2.1***** Stock Purchase Agreement dated as of August 30, 1996, among
Darling International Inc., International Processing
Corporation, International Transportation Service, Inc., and
the stockholders of International Processing Corporation and
International Transportation Service, Inc.
4.3* Indenture, dated December 29, 1993, between Darling
International Inc. and LaSalle National Bank, as Trustee,
with respect to the First Priority Senior Subordinated Notes
due July 15, 2000.
10.1*** Credit Agreement, dated as of May 23, 1995, among Darling
International Inc., the First National Bank of Boston, as
agent, Harris Trust and Savings Bank, as co-agent, and the
other lenders named therein.
10.2* Registration Rights Agreement, as amended.
10.3* Form of Indemnification Agreement.
10.4* Lease, dated November 30, 1993, between the Company and the
Port of Tacoma.
10.5***** Leases, dated July 1, 1996, between the Company and the City
and County of San Francisco.
10.6* 1993 Flexible Stock Option Plan.
10.7* Amended and Restated Employment Agreement, dated December 29,
1993, between Darling International Inc. and Kenneth A.
Ghazey.
10.7(a)**** First Amendment to Amended and Restated Employment Agreement,
dated as of September 26, 1995, between Darling International
Inc. and Kenneth A. Ghazey.
10.8* Form of Executive Severance Agreement.
10.9* 1994 Employee Flexible Stock Option Plan.
10.10* Non-Employee Directors Stock Option Plan.
10.11** Employment Agreement, dated March 31, 1995, between Darling
International Inc. and Dennis B. Longmire.
10.12****** Separation Agreement dated as of September 24, 1996, by and
between Kenneth A. Ghazey and Darling International Inc.
11 Statement re computation of per share earnings.
27 Financial Data Schedule
* Incorporated by reference to the Registrant's Registration
Statements on Form S-1 filed July 15, 1994
(Registration No. 33-79478).
** Incorporated by reference to Form 10-Q filed May 8, 1995.
*** Incorporated by reference to Form 10-Q filed August 14, 1995.
**** Incorporated by reference to Form 10-Q filed November 13, 1995.
***** Incorporated by reference to Form 8-K filed September 13, 1996.
****** Incorporated by reference to Form 10-K filed March 27, 1997.
<PAGE>
(b) REPORTS ON FORM 8-K
There were no reports filed on Form 8-K during the three months ended
March 29, 1997.
<PAGE>
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: May 13, 1997 By: /s/ Dennis B. Longmire
-------------------------
Dennis B. Longmire
Chairman and
Chief Executive Officer
Date: May 13, 1997 By: /s/ John R Witt
------------------------
John R. Witt
Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
DARLING INTERNATIONAL INC. AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 29, 1997
INDEX TO EXHIBITS
Exhibits No. Description
Page No.
2 * Settlement Agreement, dated December 29, 1993, relating to the settlement
of class action litigation styled IDS Life Insurance Company, Inc., et
al. v. Darling-Delaware Company, Inc., et al., Case No. 91 C 5166, in the
United States District Court for the Northern District of Illinois.
2.1***** Stock Purchase Agreement dated as of August 30, 1996, among Darling
International Inc., International Processing Corporation,
International Transportation Service, Inc., and the stockholders of
International Processing Corporation and International Transportation
Service, Inc.
4.3* Indenture, dated December 29, 1993, between Darling International Inc.
and LaSalle National Bank, as Trustee, with respect to the First
Priority Senior Subordinated Notes due July 15, 2000.
10.1*** Credit Agreement, dated as of May 23, 1995, among Darling
International Inc., the First National Bank of Boston, as agent,
Harris Trust and Savings Bank, as co-agent, and the other lenders
named therein.
10.2* Registration Rights Agreement, as amended.
10.3* Form of Indemnification Agreement.
10.4* Lease, dated November 30, 1993, between the Company and the Port of
Tacoma.
10.5***** Leases, dated July 1, 1996, between the Company and the City and
County of San Francisco.
10.6* 1993 Flexible Stock Option Plan.
10.7* Amended and Restated Employment Agreement, dated December 29, 1993,
between Darling International Inc. and Kenneth A. Ghazey.
10.7(a)**** First Amendment to Amended and Restated Employment Agreement,
dated as of September 26, 1995, between Darling International Inc
and Kenneth A. Ghazey.
10.8* Form of Executive Severance Agreement.
10.9* 1994 Employee Flexible Stock Option Plan.
10.10* Non-Employee Directors Stock Option Plan.
10.11** Employment Agreement, dated March 31, 1995, between Darling
International Inc. and Dennis B. Longmire.
10.12****** Separation Agreement dated as of September 24, 1996, by and
between Kenneth A. Ghazey and Darling International Inc.
<PAGE>
11 Statement re computation of per share earnings . . . . . . . . . . 18
27 Financial Data Schedule
* Incorporated by reference to the Registrant's Registration
Statements on Form S-1 filed July 15, 1994
(Registration No. 33-79478).
** Incorporated by reference to Form 10-Q filed May 8, 1995.
*** Incorporated by reference to Form 10-Q filed August 14, 1995.
**** Incorporated by reference to Form 10-Q filed November 13, 1995.
***** Incorporated by reference to Form 8-K filed September 13, 1996.
****** Incorporated by reference to Form 10-K filed March 27, 1997.
<PAGE>
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
----------------------------
March 29, 1997 March 30,
1996
------------- ----------
Earnings (Primary):
Net earnings available to common stock $ 386 $ 3,931
====== ======
Shares (Primary):
Weighted average number of
common shares outstanding 5,159 5,088
Additional shares assuming exercise of
stock options 356 349
------ ------
Average common shares outstanding
and equivalents 5,515 5,437
====== ======
Net earnings per common share $ 0.07 $ 0.72
====== ======
Earnings (Fully Diluted):
Net earnings available to common stock $ 386 $ 3,931
====== =======
Shares (Fully Diluted):
Weighted average number of
common shares outstanding 5,159 5,088
Additional shares assuming exercise of
stock options 356 349
------
Average common shares outstanding
and equivalents 5,515 5,437
====== ======
Fully diluted earnings per common share $ 0.07 $ 0.72
====== =======
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-29-1997
<CASH> 3,385
<SECURITIES> 0
<RECEIVABLES> 28,083
<ALLOWANCES> 291
<INVENTORY> 17,034
<CURRENT-ASSETS> 55,300
<PP&E> 237,683
<DEPRECIATION> 62,217
<TOTAL-ASSETS> 315,258
<CURRENT-LIABILITIES> 66,561
<BONDS> 132,624
0
0
<COMMON> 52
<OTHER-SE> 64,542
<TOTAL-LIABILITY-AND-EQUITY> 315,258
<SALES> 125,809
<TOTAL-REVENUES> 125,809
<CGS> 102,365
<TOTAL-COSTS> 121,536
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,656
<INCOME-PRETAX> 721
<INCOME-TAX> 335
<INCOME-CONTINUING> 386
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 386
<EPS-PRIMARY> 0.07
<EPS-DILUTED> 0.07
</TABLE>
