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
<TABLE> DARLING INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 28, 1997 and December 28, 1996 (in thousands, except shares and per share data) <CAPTION> June 28, December 28, 1997 1996 (unaudited) ----------- ------------ <S> ASSETS <C> <C> 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 </TABLE> The accompanying notes are an integral part of these consolidated financial statements. Page 3
<TABLE> 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) <CAPTION> Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, 1997 1996 1997 1996 (unaudited) (unaudited) -------- -------- ---------- -------- <S> <C> <C> <C> <C> 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 </TABLE> The accompanying notes are an integral part of these consolidated financial statements. Page 4
<TABLE> DARLING INTERNATIONAL INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 28, 1997 and June 29, 1996 (in thousands) <CAPTION> Six Months Ended June 28, June 29, 1997 1996 (unaudited) ------------ ---------- <S> <C> <C> 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 </TABLE> 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. <TABLE> <CAPTION> Three Months Ended Six Months Ended --------------------------- ------------------------- June 28, June 29, June 28, June 29, 1997 1996 1997 1996 ============= ============= ============= =========== <S> <C> <C> <C> <C> 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 ====== ======= ====== ====== </TABLE> Page 18