DARLING INGREDIENTS INC. - FORM 8-K - EX-99.1

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8-K - 8-K - DARLING INGREDIENTS INC.	d642650d8k.htm

Exhibit 99.1

Darling International Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

September 28, 2013

(in thousands)


	Historical Darling International			Historical Rothsay		Rothsay Adjustments			Total Rothsay			Historical Vion Ingredients		Vion Ingredients Adjustments			Total Vion Ingredients		Total Rothsay and Vion Ingredients		Financing Adjustments			Darling International Pro forma
Assets
Current assets:
Cash and cash equivalents		8,369			—		(2,055	)(a)(i)		(2,055	)		239,722		(20,690	)(a)(ii)		219,032		216,977		(18,504	)(a)(iii)		206,842
Accounts receivable, net of allowances for doubtful accounts		106,693			19,799		—			19,799			890,780		(282,621	)(b)		608,159		627,958		—			734,651
Inventories		71,280			9,093		2,400	(c)		11,493			309,620		—			309,620		321,113		—			392,393
Deferred income taxes		14,358			—		2,335	(d)(i)		2,335			2,264		14,989	(d)(ii)		17,253		19,588		17,284	(d)(i), (d)(ii) & (d)(iii)		51,230
Other current assets		23,631			275		—			275			—		—			—		275		—			23,906

Total current assets		224,331			29,167		2,680			31,847			1,442,386		(288,322	)		1,154,064		1,185,911		(1,220	)		1,409,022

Property, plant and equipment, net		522,262			86,727		42,481	(e)		129,208			533,733		213,947	(e)		747,680		876,888		—			1,399,150
Intangible assets		364,415			—		231,428	(e)		231,428			157,693		447,420	(e)		605,113		836,541		—			1,200,956
Goodwill		446,742			—		281,438	(e)		281,438			—		779,598	(e)		779,598		1,061,036		—			1,507,778
Investment in unconsolidated subsidiary		116,250			—		—			—			—		—			—		—		—			116,250
Deferred loan costs		21,992			—		—			—			—		—			—		—		36,703			58,695	(f)
Other assets		17,643			—		—			—			39,709		(16,257	)(b)		23,452		23,452		—			41,095

Total other assets		1,489,304			86,727		555,347			642,074			731,135		1,424,708			2,155,843		2,797,917		36,703			4,323,924

Total		1,713,635			115,894		558,027			673,921			2,173,521		1,136,386			3,309,907		3,983,828		35,483			5,732,946

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		48,554			19,311		—			19,311			—		—			—		19,311		—			67,865
Accrued expenses		99,595			3,279		2,632	(g)		5,911			—		—			—		5,911		—			105,506
Other current liabilities					—		—			—			508,512		—			508,512		508,512		—			508,512
Current portion of long-term debt		86			—		—			—			—		—			—		—		—			86

Total current liabilities		148,235			22,590		2,632			25,222			508,512		—			508,512		533,734		—			681,969

Other liabilities:
Long-term debt		250,076			—		—			—			—		—			—		—		2,089,052	(h)		2,339,128
Deferred income taxes		105,931			—		15,621	(d)(i)		15,621			25,554		228,284	(d)(ii)		253,838		269,459		—			375,390
Other noncurrent liabilities		51,086			9,853		2,683	(i)		12,536			278,228		14,058	(d)(ii)		292,286		304,822		—			355,908

Total liabilities		555,328			32,443		20,936			53,379			812,294		242,342			1,054,636		1,108,015		2,089,052			3,752,395

Commitments and contingencies
Stockholders’ equity:
Common stock		1,192			—		—			—			—		—			—		—		400	(a)(iv) & (h)		1,592
Paid in capital and other equity		599,158			83,451		(83,451	)(j)(i)		—			—		20,730	(j)(ii)		20,730		20,730		820,600	(a)(v) & (h)		1,440,488
Non-controlling interest		—			—		—			—			39,381					39,381		39,381		—			39,381
Other comprehensive income/(loss)		(27,293	)		—		—			—			—		—			—		—					(27,293	)
Retained earnings/Net assets		585,250			—		620,542	(k)		620,542			1,321,846		873,314	(k)		2,195,160		2,815,702		(2,874,569	)(k)		526,383

Total stockholders’ equity		1,158,307			83,451		537,091			620,542			1,361,227		894,044			2,255,271		2,875,813		(2,053,569	)		1,980,551

Total		1,713,635			115,894		558,027			673,921			2,173,521		1,136,386			3,309,907		3,983,828		35,483			5,732,946

Notes to Unaudited Pro Forma Condensed Combined Balance Sheet:

a)(i)

Represents use of cash in connection with the Rothsay Acquisition.

(ii)

Represents use of cash in connection with the VION Acquisition. The cash and cash equivalents after giving effect to the Transactions will change to reflect the actual price per share and the number of shares sold and our revolving borrowings in connection with the closing of the VION Acquisition.

(iii)

Represents use of cash in connection with financing of the Transactions.

(iv)

Represents the adjustment for the par value of $0.01 per share to give effect to the issuance of 40 million shares in the Common Stock Offering.

(v)

Represents the adjustment to paid-in-capital and other equity to give effect to the issuance of 40 million shares in the Common Stock Offering.

Represents the adjustment to accounts receivable to eliminate an intercompany receivable between VION Food and VION Ingredients.

Represents the purchase accounting adjustment related to assigning an estimated fair value to the acquired inventory of the Rothsay business as of September 28, 2013, the assumed date of closing, of $2.4 million.

d)(i)

Darling recognizes deferred income taxes for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The net deferred tax liability primarily relates from book and tax basis differences of Rothsay’s identified intangible assets, which for Canadian tax purposes, 25% of the tax basis is deemed to be non-amortizable, computing using the applicable statutory tax rate. For purposes of this presentation, management has determined that an APB 23 assertion cannot be made.

(ii)

Darling recognizes deferred income taxes for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities and tax contingencies are based upon the applicable statutory income tax rate. The net deferred tax liability primarily relates from book and tax basis differences of VION Ingredient’s identified intangible assets and property, plant and equipment. Darling has not accrued any U.S. deferred tax liability on foreign earnings as the Company considers any cash to be permanently reinvested overseas.

(iii)

Represents the tax consequences associated with the redemption of existing senior debt and the write-off of debt issuance cost associated with existing senior debt.

Represents the adjustments to Rothsay’s and VION Ingredients’ carrying amount of the asset to its estimated fair value as of September 28, 2013, with respect to Rothsay and as of September 30, 2013, with respect to VION Ingredients, as part of the allocation of purchase price.

Represents the net adjustment related to deferred financing fees. The new deferred financing fees total $58.7 million. The fees will be amortized over the lives of the various loans.


Deferred Loan Cost:
Revolver – existing prior to acquisitions	$	5,370
Revolver		5,738
Term Loan A		11,627
Term Loan B		24,000
Senior Notes		7,500
Fees (legal, etc.)		4,459
Total Deferred Loan Costs	$	58,694

Represents a severance accrual for a former executive of Rothsay and accrued expenses associated with the financing of the Rothsay Acquisition.

Represents the net adjustment to record Darling’s $641.3 million of debt used to finance the consideration paid in cash to MFI of approximately $625.4 million, recover the debt issuance costs of $11.6 million included in Darling’s historical financial statements and certain fees incurred in connection with the Acquisitions of $4.4 million. In addition, represents the adjustment to record Darling’s $1,700 million of debt and its $821 million equity issue (assuming 40 million shares to be issued at a purchase price of $21.27 per share), after deducting estimated underwriting discounts and commissions, used to finance the purchase price paid to VION Holding N.V. of approximately $2,225 million, redemption of unsecured debt of approximately $250 million and $27.4 million of debt repayment premiums and debt issuance cost of $41.2 million. The redemption of the $250 million in unsecured debt is required as a result of the Transactions. Assuming the number of shares offered in the Common Stock Offering remains the same, a $1.00 increase/(decrease) in the public offering price of the shares of common stock in the Common Stock Offering would increase/(decrease) the estimated net proceeds received by us from the Common Stock Offering by approximately $38.6 million (or approximately $44.4 million if the underwriters’ exercise their option to purchase additional shares of our common stock in full), after deducting estimated underwriting discounts and commissions. To the extent the public offering price differs from the assumed sale price of our common stock in the Common Stock Offering and we sell the same number of shares assumed herein, we will incur a correspondingly lesser or greater amount of debt as part of the Financing Transactions to reflect additional common stock proceeds from an increase in price or less common stock proceeds in the event of a lower price. This will also change our interest expense going forward.

Represents the adjustment to record a certain pension liability assumed by Darling in the Rothsay Acquisition.

(i) Represents the elimination of Rothsay’s net asset position, which, for purposes of the unaudited pro forma condensed combined balance sheet, has been reflected in additional paid-in capital and other equity and eliminated as part of the Rothsay acquisition.

(ii) For the VION Ingredients Acquisition, represents $20.7 million of integration program incentive compensation expected to be incurred as a result of the VION Acquisition. The restricted stock will vest over four years.

For the Rothsay Acquisition, represents the net impact to retained earnings, as a result of the pro forma adjustment for the pension liability of $1.6 million and $3.2 million of certain direct transaction costs, which have not yet been incurred as of September 28, 2013, but are expected to be incurred after such date. Such amounts have been recorded net of taxes to the extent that the adjustment gives rise to a tax deduction. For the VION Acquisition, represents the net impact to retained earnings, as a result of the pro forma adjustments for debt repayment premiums of $16.8 million, integration expenses of $13.7 million, certain direct transaction cost of $12.7 million, the write-off of the commitment fee of $8.0 million associated with the unused Bridge facility and the write-off of existing debt issuance costs of $2.7 million, which have not been incurred as of September 28, 2013, but are expected to be incurred after such date. Such amounts have been recorded net of taxes to the extent that the adjustment gives rise to a tax deduction. Additionally, other adjustments to retained earnings related to the financing of each transaction are shown in the financing adjustments column and as such for presentation purposes are recorded in retained earnings for both Rothsay Adjustments and VION Adjustments presentations.

Darling International Inc.

Unaudited Pro Forma Condensed Combined Income Statement

Year Ended December 29, 2012

(in thousands, except per share data)


	Historical Darling International			Historical Rothsay		Rothsay Adjustments			Total Rothsay		Historical Vion Ingredients			Vion Ingredients Adjustments			Total Vion Ingredients			Total Rothsay and Vion Ingredients			Financing Adjustments			Darling International Pro Forma
Net revenues		1,701,429			227,411		—			227,411		2,087,897			—			2,087,897			2,315,308			—			4,016,737
Direct costs and operating expenses:
Cost of sales and operating expenses		1,232,604			131,806		—			131,806		1,685,403			—			1,685,403			1,817,209			—			3,049,813
Selling, general and administrative expenses		151,713			8,830		2,326	(a)		11,156		151,091			—			151,091			162,247			—			313,960
Acquisitions costs		—			—		—			—		—			—			—			—			—			—
Depreciation and amortization		85,371			13,791		22,898	(i)		36,689		84,149			37,176	(e)		121,325			158,014			—			243,385

Total direct costs and operating expenses		1,469,688			154,427		25,224			179,651		1,920,643			37,176			1,957,819			2,137,470			—			3,607,158
Operating Income		231,741			72,984		(25,224	)		47,760		167,254			(37,176	)		130,078			177,838			—			409,579
Interest Expense		(24,054	)		—		—			—		(26,867	)		14,081	(l)		(12,786	)		(12,786	)		(88,162	)(b) & (g)		(125,002	)
Other, net		1,760			—		—			—		13,617			(5,849	)(k)		7,768			7,768			—			9,528

Total other expense		(22,294	)		—		—			—		(13,250	)		8,232			(5,018	)		(5,018	)		(88,162	)		(115,473	)
Equity in net income/(loss) of unconsolidated subsidiary		(2,662	)		—		—			—		—			—			—			—			—			(2,662	)

Income from continuing operations before income taxes		206,785			72,984		(25,224	)		47,760		154,004			(28,943	)		125,061			172,821			(88,162	)		291,444
Income taxes		76,015			—		16,716	(j)		16,716		45,924			(8,469	)(c) & (d)		37,455			54,171			(30,916	)(c) & (d)		99,270
Non-controlling interest		—			—		—			—		(9,282	)		—			(9,282	)		(9,282	)		—			(9,282	)

Net income		130,770			72,984		(41,940	)		31,044		98,798			(20,474	)		78,324			109,368			(57,246	)		182,892

Net income per share:
Basic	$	1.11																								$	1.16
Diluted	$	1.11																								$	1.16
Weighted average number of shares:
Basic		117,592																						40,250			158,656
Diluted		118,089																						40,250			159,048

Darling International Inc.

Unaudited Pro Forma Condensed Combined Income Statement

Nine Months Ended September 29, 2012

(in thousands, except per share data)


	Historical Darling International			Historical Rothsay		Rothsay Adjustments			Total Rothsay		Historical Vion Ingredients			Vion Ingredients Adjustments			Total Vion Ingredients			Total Rothsay and Vion Ingredients			Financing Adjustments			Darling International Pro Forma
Net revenues		1,276,514			172,064		—			172,064		1,522,576			—			1,522,576			1,694,640			—			2,971,154
Direct costs and operating expenses:
Cost of sales and operating expenses		918,516			97,504		—			97,504		1,226,154			—			1,226,154			1,323,658			—			2,242,174
Selling, general and administrative expenses		112,786			6,321		1,735	(a)		8,056		113,151			—			113,151			121,207			—			233,993
Acquisitions costs		—			—		—			—		—			—			—			—			—			—
Depreciation and amortization		62,958			10,277		17,173	(i)		27,450		57,505			29,981	(e)		87,486			114,936			—			177,894

Total direct costs and operating expenses		1,094,260			114,102		18,908			133,010		1,396,810			29,981			1,426,791			1,559,801			—			2,654,061
Operating Income		182,254			57,962		(18,908	)		39,054		125,766			(29,981	)		95,785			134,839			—			317,093
Interest Expense		(18,546	)		—		—			—		(18,819	)		10,545	(l)		(8,274	)		(8,274	)		(66,317	)(b) & (g)		(93,137	)
Other, net		(106	)		—		—			—		7,711			(4,380	)(k)		3,331			3,331			—			3,225

Total other expense		(18,652	)		—		—			—		(11,108	)		6,165			(4,943	)		(4,943	)		(66,317	)		(89,912	)
Equity in net income/(loss) of unconsolidated subsidiary		(1,725	)		—		—			—		—			—			—			—			—			(1,725	)

Income from continuing operations before income taxes		161,877			57,962		(18,908	)		39,054		114,658			(23,816	)		90,842			129,896			(66,317	)		225,456
Income taxes		59,909			—		13,669	(j)		13,669		31,309			(6,969	)(c) & (d)		24,340			38,009			(23,256	)(c) & (d)		74,662
Non-controlling interest		—			—		—			—		(8,510	)		—			(8,510	)		(8,510	)		—			(8,510	)

Net income		101,968			57,962		(32,577	)		25,385		74,839			(16,847	)		57,992			83,377			(43,061	)		142,284

Net income per share:
Basic	$	0.87																								$	0.90
Diluted	$	0.86																								$	0.90
Weighted average number of shares:
Basic		117,531																						40,250			158,656
Diluted		118,049																						40,250			159,048

Darling International Inc.

Unaudited Pro Forma Condensed Combined Income Statement

Nine Months Ended September 28, 2013

(in thousands, except per share data)


	Historical Darling International			Historical Rothsay		Rothsay Adjustments			Total Rothsay			Historical Vion Ingredients			Vion Ingredients Adjustments			Total Vion Ingredients			Total Rothsay and Vion Ingredients			Financing Adjustments			Darling International Pro Forma
Net revenues		1,294,801			180,567		—			180,567			1,619,641			—			1,619,641			1,800,208			—			3,095,009
Direct costs and operating expenses:
Cost of sales and operating expenses		942,697			109,151		—			109,151			1,304,838			—			1,304,838			1,413,989			—			2,356,686
Selling, general and administrative expenses		124,843			4,941		1,708	(a)		6,649			117,956			—			117,956			124,605			—			249,448
Acquisitions costs		9,157			—		(3,870	)(h)		(3,870	)		—			(4,310	)(f)		(4,310	)		(8,180	)		—			977
Depreciation and amortization		67,074			9,860		17,173	(i)		27,033			55,313			29,722	(e)		85,035			112,068			—			179,142

Total direct costs and operating expenses		1,143,771			123,952		15,011			138,963			1,478,107			25,412			1,503,519			1,642,482			—			2,786,253
Operating Income		151,030			56,615		(15,011	)		41,604			141,534			(25,412	)		116,122			157,726			—			308,756
Interest Expense		(16,607	)		—		—			—			(21,757	)		9,819	(l)		(11,938	)		(11,938	)		(64,596	)(b) & (g)		(93,141	)
Other, net		(2,619	)		—		—			—			4,197			(21	)(k)		4,176			4,176			—			1,557

Total other expense		(19,226	)		—		—			—			(17,560	)		9,798			(7,762	)		(7,762	)		(64,596	)		(91,584	)
Equity in net income/(loss) of unconsolidated subsidiary		8,796			—		—			—			—			—			—			—			—			8,796

Income from continuing operations before income taxes		140,600			56,615		(15,011	)		41,604			123,974			(15,614	)		108,360			149,964			(64,596	)		225,968
Income taxes		54,126			—		14,561	(j)		14,561			32,996			(4,170	)(c) & (d)		28,826			43,387			(22,645	)(c) & (d)		74,868
Non-controlling interest		—			—		—			—			(9,464	)		—			(9,464	)		(9,464	)		—			(9,464	)

Net income		86,474			56,615		(29,572	)		27,043			81,514			(11,444	)		70,070			97,113			(41,951	)		141,636

Net income per share:
Basic	$	0.73																									$	0.89
Diluted	$	0.73																									$	0.89
Weighted average number of shares:
Basic		118,156																							40,500			158,656
Diluted		118,548																							40,500			159,048

Darling International Inc.

Unaudited Pro Forma Condensed Combined Income Statement

Twelve Months Ended September 28, 2013

(in thousands, except per share data)


	Historical Darling International			Historical Rothsay		Rothsay Adjustments			Total Rothsay			Historical Vion Ingredients			Vion Ingredients Adjustments			Total Vion Ingredients			Total Rothsay and Vion Ingredients			Financing Adjustments			Darling International Pro Forma
Net revenues		1,719,716			235,914		—			235,914			2,184,962			—			2,184,962			2,420,876			—			4,140,592
Direct costs and operating expenses:
Cost of sales and operating expenses		1,256,785			143,453		—			143,453			1,764,087			—			1,764,087			1,907,540			—			3,164,325
Selling, general and administrative expenses		163,770			7,450		2,299	(a)		9,749			155,896			—			155,896			165,645			—			329,415
Acquisitions costs		9,157			—		(3,870	)(h)		(3,870	)		—			(4,310	)(f)		(4,310	)		(8,180	)		—			977
Depreciation and amortization		89,487			13,374		22,898	(i)		36,272			81,957			36,916	(e)		118,873			155,145			—			244,632

Total direct costs and operating expenses		1,519,199			164,277		21,327			185,604			2,001,940			32,606			2,034,546			2,220,150			—			3,739,349
Operating Income		200,517			71,637		(21,327	)		50,310			183,022			(32,606	)		150,416			200,726			—			401,243
Interest Expense		(22,115	)		—		—			—			(29,805	)		13,355	(l)		(16,450	)		(16,450	)		(86,441	)(b) & (g)		(125,006	)
Other, net		(753	)		—		—			—			10,103			(1,490	)(k)		8,613			8,613			—			7,860

Total other expense		(22,868	)		—		—			—			(19,702	)		11,865			(7,837	)		(7,837	)		(86,441	)		(117,146	)
Equity in net income/(loss) of unconsolidated subsidiary		7,859			—		—			—			—			—			—			—			—			7,859

Income from continuing operations before income taxes		185,508			71,637		(21,327	)		50,310			163,320			(20,741	)		142,579			192,889			(86,441	)		291,956
Income taxes		70,232			—		17,609	(j)		17,609			47,611			(5,670	)(c) & (d)		41,941			59,549			(30,305	)(c) & (d)		99,476
Non-controlling interest		—			—		—			—			(10,236	)		—			(10,236	)		(10,236	)		—			(10,236	)

Net income		115,276			71,637		(38,936	)		32,702			105,473			(15,071	)		90,402			123,104			(56,136	)		182,244

Net income per share:
Basic	$	0.98																									$	1.15
Diluted	$	0.97																									$	1.15
Weighted average number of shares:
Basic		117,592																							40,250			158,656
Diluted		118,089																							40,250			159,048

Notes to Unaudited Pro Forma Condensed Combined Income Statement:

Material non-recurring charges or credits and related tax effects, primarily related to pension, severance, and certain transaction and financing costs, which result directly from the Transactions and which will be included in the income of Darling within the 12 months succeeding the Transactions are not considered in the pro forma income statements.

(a)

Represents the adjustment to selling, general and administrative costs for additional pension expense expected to be incurred under the new pension plans and information technology costs under a transitional services agreement executed between Darling and MFI of $2.3 million, $2.3 million, $1.7 million and $1.7 million for the year ended December 29, 2012, the last twelve months ended September 28, 2013 and for the nine months ended September 28, 2013 and September 29, 2012, respectively.

(b)

Represents the adjustment to interest expense for the additional debt that was incurred under the Senior Secured Facilities and Senior Notes to finance the purchase price of the Acquisitions. See footnote (q) for interest expense by debt facility. To finance the Rothsay Acquisition, on September 27, 2013, Darling modified and extended its existing $415 million senior secured facility to a new $1.35 billion senior secured facility. The adjustment reflects that Darling borrowed $295.8 million against the $1.0 billion revolving loan facility to partially fund the Rothsay Acquisition. Darling also borrowed $345.5 million against the new term loan facility to complete the funding of the Rothsay Acquisition. In addition, the adjustment to interest expense for the additional debt that was incurred under the Senior Secured Facilities and Senior Notes to finance the VION Acquisition. The adjustment reflects that, for the VION Acquisition, Darling will borrow $1.2 billion under the $1.2 billion term loan B facility, and issue $500.0 million of notes offered hereby. The interest rate applicable to any borrowing under the Senior Secured Facilities is variable based upon Darling’s consolidated total leverage ratio and ranges from London Inter-Bank Offer Rate (“LIBOR”)/Canadian Dealer Offered Rate (“CDOR”) plus 1.5% to 2.75% per annum with no floor on LIBOR or CDOR. For purposes of the pro forma condensed combined financials, we used LIBOR/CDOR, as applicable, plus 2.75% per annum. In addition, there is a 0.5% commitment fee on the unused portion of the revolving loan facility, which was also included in the pro forma condensed combined financial statements. The interest rate applicable to the notes offered hereby is fixed at 6.25% per annum. The interest rate applicable to any borrowings under the term loan B facility in U.S. dollars is variable based upon ranges from LIBOR plus 3%. The interest rate applicable to any borrowings under the term loan B facility in euros is variable based upon ranges from LIBOR plus 3.25%. Thus, the weighted average interest rate on the new debt is 3.76%, including the commitment fee. The adjustment also includes amortization of the deferred financing fees. The new deferred financing fees total $52.7 million. The weighted average interest rate on the new debt including the commitment fee is 3.98%. A 0.125% change in the weighted average interest rate would result in an adjustment to interest expense and pre-tax income of $2.9 million.

(c)	Represents the adjustment to income tax expense that would have been incurred had the Transactions occurred on January 1, 2012, based upon the applicable statutory income tax rate.

(d)	Darling has not accrued any U.S. deferred tax liability on VION ingredients foreign earnings as it considers any earnings to be permanently reinvested overseas.

(e)

Represents the additional depreciation and amortization expense that Darling anticipates incurring as a result of the adjustment to the carrying value of the VION Ingredients assets to fair value. Darling expects to depreciate the fair value of the purchased property, plant and equipment, including the transportation assets over their estimated useful lives of 3 to 25 years. Darling expects to amortize the fair value of the definite lived intangibles of $453.8 million acquired in the VION Acquisition on a straight line basis over their estimated useful lives of between 9 and 16 years. Upon finalization of the asset valuations, specific useful lives will be

assigned to the acquired assets, and depreciation and amortization will be adjusted accordingly and such adjustments may be material. Darling expects to have $151.3 million of identifiable intangibles with indefinite lives associated with the VION Acquisition.

(f)	Represents the VION Acquisition related costs that have not been included in the unaudited pro forma statements because they are non-recurring.

(g)	The table below details the components of interest expense per Darling’s pro forma adjustments:

Rothsay and VION Ingredients Interest Expense


	Year Ended December 29, 2012			Last Twelve Months Ended September 28, 2013			Nine Months Ended September 28, 2013			Nine Months Ended September 29, 2012
Term loan A (CAD $)	$	5,970		$	5,586		$	4,121		$	4,476
Term loan A ($)		5,926			5,628			4,187			4,485
Term loan B (€)		22,768			22,513			16,859			17,114
Term loan B ($)		22,409			21,726			16,209			16,892
Revolving facility (CAD $)		1,990			1,972			1,465			1,511
Revolving facility ($)		7,652			7,569			5,669			5,754
Notes offered hereby		31,597			31,597			23,698			23,698
Letters of credit		203			203			152			152
Redemption of $250 million of existing notes		(21,486	)		(21,486	)		(16,115	)		(16,115	)
Commitment fees		2,495			2,495			1,872			1,871
Deferred loan cost amortization		8,638			8,638			6,479			6,479
Total pro forma adjustment to interest expense	$	88,162		$	86,441		$	64,596		$	66,317

(h)	Represents the Rothsay Acquisition related costs incurred by Darling through September 29, 2013. These costs have not been included in the unaudited pro forma condensed combined income statements because they are non-recurring.

(i)

Represents the additional depreciation and amortization expense that Darling anticipates incurring as a result of the adjustment to the carrying value of the Rothsay assets to fair value. Darling expects to depreciate the fair value of the purchased property, plant and equipment, including the transportation assets, over their estimated useful lives of 3 to 20 years. Darling expects to amortize the fair value of the identified intangibles of $231.4 million acquired in the Rothsay Acquisition on a straight line basis over their estimated useful lives of between 4 and 16 years. Upon finalization of the asset valuations, specific useful lives will be assigned to the acquired assets, and depreciation and amortization will be adjusted accordingly. Darling does not expect to have any identifiable intangibles with indefinite lives associated with the Rothsay Acquisition. See footnote (e) above.

(j)	Represents the adjustment to income tax expense that would have been incurred had the Rothsay Acquisition occurred on January 1, 2012, based upon the applicable statutory federal tax rate of 35%.

(k)	Elimination of intercompany interest income between VION Food and VION Ingredients.

(l)	Elimination of intercompany interest expense between VION Foods and VION Ingredients.

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