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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q
 
 (Mark One)      
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended
April 3, 2021
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   001-13323

DARLING INGREDIENTS INC.
(Exact name of registrant as specified in its charter) 
Delaware36-2495346
 (State or other jurisdiction     (I.R.S. Employer
of incorporation or organization)   Identification Number)
 5601 N MacArthur Blvd., Irving, Texas     75038
(Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code:  (972) 717-0300

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock $0.01 par value per shareDARNew York Stock Exchange(“NYSE”)
 
    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 reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes      No
 
    Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).        Yes      No 

 Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer    
Non-accelerated filer  Smaller reporting company       
Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of Exchange Act.
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No 
 
There were 163,172,181 shares of common stock, $0.01 par value, outstanding at May 6, 2021.



DARLING INGREDIENTS INC. AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED APRIL 3, 2021
 
 
TABLE OF CONTENTS   

 
 
  Page No.
  
   
 
 
  
   
 
  
   
 
  
   
 
   
   
 47
   
   
   
  
   
 
2





DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
April 3, 2021 and January 2, 2021
(in thousands, except share data)
April 3,
2021
January 2,
2021
ASSETS(unaudited)
Current assets:
Cash and cash equivalents$71,199 $81,617 
Restricted cash177 103 
Accounts receivable, less allowance for bad debts of $9,111 at
   April 3, 2021 and $10,815 at January 2, 2021
385,663 405,387 
Inventories420,659 405,922 
Prepaid expenses50,251 47,793 
Income taxes refundable3,274 3,883 
Other current assets9,544 42,289 
Total current assets940,767 986,994 
Property, plant and equipment, less accumulated depreciation of $1,731,400 at
   April 3, 2021 and $1,702,123 at January 2, 2021
1,822,075 1,863,814 
Intangible assets, less accumulated amortization of $569,477 at
   April 3, 2021 and $568,086 at January 2, 2021
452,539 473,680 
Goodwill1,241,242 1,260,240 
Investment in unconsolidated subsidiaries915,085 804,682 
Operating lease right-of-use assets145,238 146,563 
Other assets59,099 60,682 
Deferred income taxes15,402 16,676 
 $5,591,447 $5,613,331 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Current portion of long-term debt$26,997 $27,538 
Accounts payable, principally trade245,648 255,340 
Income taxes payable15,627 17,497 
Current operating lease liabilities38,064 39,459 
Accrued expenses311,371 335,471 
Total current liabilities637,707 675,305 
Long-term debt, net of current portion1,417,534 1,480,531 
Long-term operating lease liabilities108,777 109,707 
Other non-current liabilities115,799 117,371 
Deferred income taxes281,684 276,208 
Total liabilities2,561,501 2,659,122 
Commitments and contingencies
Stockholders’ equity:  
     Common stock, $0.01 par value; 250,000,000 shares authorized; 171,519,389 and
        169,880,238 shares issued at April 3, 2021 and January 2, 2021,
        respectively
1,715 1,699 
Additional paid-in capital1,611,845 1,597,429 
     Treasury stock, at cost; 8,364,523 and 7,679,849 shares at
       April 3, 2021 and January 2, 2021, respectively
(199,851)(151,710)
Accumulated other comprehensive loss(295,796)(252,433)
Retained earnings1,848,690 1,696,924 
Total Darling's stockholders’ equity2,966,603 2,891,909 
Noncontrolling interests63,343 62,300 
 Total stockholders' equity$3,029,946 $2,954,209 
 $5,591,447 $5,613,331 
 The accompanying notes are an integral part of these consolidated financial statements.
3


DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended April 3, 2021 and March 28, 2020
(in thousands, except per share data)
(unaudited)


 
Three Months Ended
 April 3,
2021
March 28,
2020
Net sales$1,046,716 $852,842 
Costs and expenses:  
Cost of sales and operating expenses772,784 646,908 
Loss/(gain) on sale of assets(64)61 
Selling, general and administrative expenses97,398 96,193 
Restructuring and asset impairment charges778  
Depreciation and amortization78,534 84,671 
Total costs and expenses949,430 827,833 
 Equity in net income of Diamond Green Diesel
102,225 97,820 
Operating income199,511 122,829 
Other expense:  
Interest expense(16,428)(19,090)
Foreign currency gain/(loss)(410)1,664 
Other expense, net(1,159)(1,881)
Total other expense(17,997)(19,307)
Equity in net income of other unconsolidated subsidiaries612 869 
Income before income taxes182,126 104,391 
Income tax expense28,708 18,300 
Net income153,418 86,091 
Net income attributable to noncontrolling interests(1,652)(581)
Net income attributable to Darling$151,766 $85,510 
Basic income per share$0.93 $0.52 
Diluted income per share$0.90 $0.51 

 



The accompanying notes are an integral part of these consolidated financial statements.
4


DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
Three months ended April 3, 2021 and March 28, 2020
(in thousands)
(unaudited)

Three Months Ended
 April 3, 2021March 28, 2020
Net income$153,418 $86,091 
Other comprehensive income/(loss), net of tax:  
Foreign currency translation(38,222)(65,236)
Pension adjustments792 648 
Soybean meal derivative adjustments(257) 
Corn option derivative adjustments(800)136 
Heating oil derivative adjustments3,464 10,870 
Foreign exchange derivative adjustments(6,806)(9,151)
Total other comprehensive loss, net of tax(41,829)(62,733)
Total comprehensive income$111,589 $23,358 
Comprehensive income attributable to noncontrolling interests
3,186 492 
Comprehensive income attributable to Darling$108,403 $22,866 





The accompanying notes are an integral part of these consolidated financial statements.

5



DARLING INGREDIENTS INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Three months ended April 3, 2021 and March 28, 2020
(in thousands, except share data)
(unaudited)
Common Stock
Number of Outstanding Shares
$0.01 par Value
Additional Paid-In CapitalTreasury StockAccumulated Other Comprehensive LossRetained EarningsStockholders' equity attributable to DarlingNon-controlling InterestsTotal Stockholders' Equity
Balances at January 2, 2021162,200,389 $1,699 $1,597,429 $(151,710)$(252,433)$1,696,924 $2,891,909 $62,300 $2,954,209 
Net income— — — — — 151,766 151,766 1,652 153,418 
Distribution of noncontrolling interest earnings
— — — — — — — (2,143)(2,143)
Pension liability adjustments, net of tax
— — — — 792 — 792 — 792 
Heating oil derivative adjustments, net of tax— — — — 3,464 — 3,464 — 3,464 
Corn option derivative adjustments, net of tax— — — — (800)— (800)— (800)
Soybean meal derivative adjustments, net of tax— — — — (257)— (257)— (257)
Foreign exchange derivative adjustments, net of tax— — — — (6,806)— (6,806)— (6,806)
Foreign currency translation adjustments
— — — — (39,756)— (39,756)1,534 (38,222)
Issuance of non-vested stock  58 — — — 58 — 58 
Stock-based compensation— — 8,357 — — — 8,357 — 8,357 
Treasury stock(684,674)— — (48,141)— — (48,141)— (48,141)
Issuance of common stock1,639,151 16 6,001 — — — 6,017 — 6,017 
Balances at April 3, 2021163,154,866 $1,715 $1,611,845 $(199,851)$(295,796)$1,848,690 $2,966,603 $63,343 $3,029,946 


Common Stock
Number of Outstanding Shares
$0.01 par Value
Additional Paid-In CapitalTreasury StockAccumulated Other Comprehensive LossRetained EarningsStockholders' equity attributable to DarlingNon-controlling InterestsTotal Stockholders' Equity
Balances at December 28, 2019163,775,111 $1,686 $1,560,897 $(75,022)$(321,847)$1,400,105 $2,565,819 $77,531 $2,643,350 
Net income— — — — — 85,510 85,510 581 86,091 
Deductions to noncontrolling interests
— — 3,271 — — — 3,271 (13,146)(9,875)
Pension liability adjustments, net of tax
— — — — 648 — 648 — 648 
Heating oil derivative adjustments, net of tax
— — — — 10,870 — 10,870 10,870 
Corn option derivative adjustments, net of tax— — — — 136 — 136 — 136 
Foreign exchange derivative adjustments, net of tax— — — — (9,151)— (9,151)— (9,151)
Foreign currency translation adjustments
— — — — (65,147)— (65,147)(89)(65,236)
Issuance of non-vested stock8,000  40 — — — 40 — 40 
Stock-based compensation— — 10,778 — — — 10,778 — 10,778 
Treasury stock(2,372,876)— — (60,082)— — (60,082)— (60,082)
Issuance of common stock447,729 5 868 — — — 873 — 873 
Balances at March 28, 2020161,857,964 $1,691 $1,575,854 $(135,104)$(384,491)$1,485,615 $2,543,565 $64,877 $2,608,442 

The accompanying notes are an integral part of these consolidated financial statements.

6


DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended April 3, 2021 and March 28, 2020
(in thousands)
(unaudited)
 April 3,
2021
March 28,
2020
Cash flows from operating activities:  
Net Income$153,418 $86,091 
Adjustments to reconcile net income to net cash provided by operating activities:
  
Depreciation and amortization78,534 84,671 
Loss (gain) on disposal of property, plant, equipment and other assets(64)61 
Asset impairment138  
Deferred taxes11,809 6,377 
Decrease in long-term pension liability(448)(264)
Stock-based compensation expense8,415 10,818 
Write-off deferred loan costs
598  
Deferred loan cost amortization
1,040 1,416 
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries
(102,837)(98,689)
Distributions of earnings from other unconsolidated subsidiaries57  
Changes in operating assets and liabilities, net of effects from acquisitions:
  
Accounts receivable10,721 487 
Income taxes refundable/payable(760)348 
Inventories and prepaid expenses(27,188)(24,999)
Accounts payable and accrued expenses(13,462)(16,790)
Other18,834 (14,981)
Net cash provided by operating activities138,805 34,546 
Cash flows from investing activities:  
Capital expenditures(60,751)(61,599)
       Acquisitions, net of cash acquired(340) 
       Investment in unconsolidated subsidiary(4,449) 
Gross proceeds from disposal of property, plant and equipment and other assets
1,629 379 
Payments related to routes and other intangibles(347)(3,416)
Net cash used by investing activities(64,258)(64,636)
Cash flows from financing activities:  
Proceeds from long-term debt9,262 8,264 
Payments on long-term debt(60,444)(8,638)
Borrowings from revolving credit facility111,000 219,933 
Payments on revolving credit facility(97,000)(100,782)
Net cash overdraft financing499 (9,594)
Issuance of common stock50 67 
Repurchase of common stock (55,044)
Minimum withholding taxes paid on stock awards(42,268)(4,328)
Acquisition of noncontrolling interest (8,784)
Distributions to noncontrolling interests(2,143)(688)
Net cash provided (used) by financing activities(81,044)40,406 
Effect of exchange rate changes on cash(3,847)(6,916)
Net increase (decrease) in cash, cash equivalents and restricted cash(10,344)3,400 
Cash, cash equivalents and restricted cash at beginning of period81,720 73,045 
Cash, cash equivalents and restricted cash at end of period$71,376 $76,445 
Supplemental disclosure of cash flow information:  
Accrued capital expenditures$(9,678)$(1,630)
Cash paid during the period for:  
Interest, net of capitalized interest$2,774 $5,863 
Income taxes, net of refunds$15,578 $11,453 
Non-cash operating activities
 Operating lease right of use asset obtained in exchange for new lease liabilities$12,404 $9,121 
Non-cash financing activities
Debt issued for assets$ $21 

The accompanying notes are an integral part of these consolidated financial statements.
7


DARLING INGREDIENTS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
April 3, 2021
(unaudited)

(1)General

The accompanying consolidated financial statements for the three month periods ended April 3, 2021 and March 28, 2020, have been prepared by Darling Ingredients Inc., a Delaware corporation (“Darling”, and together with its subsidiaries, the “Company” or “we”, “us” or “our”) in accordance with generally accepted accounting principles in the United States (“GAAP”) 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) that 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. However, these operating results are not necessarily indicative of the results expected for a full fiscal year. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations.  However, management of the Company believes, to the best of their knowledge, 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 audited consolidated financial statements contained in the Company’s Form 10-K for the fiscal year ended January 2, 2021. 

(2)Summary of Significant Accounting Policies

(a)Basis of Presentation

The consolidated financial statements include the accounts of Darling and its consolidated subsidiaries. Noncontrolling interests represent the outstanding ownership interest in the Company's consolidated subsidiaries that are not owned by the Company. In the accompanying Consolidated Statements of Operations, the noncontrolling interest in net income of the consolidated subsidiaries is shown as an allocation of the Company's net income and is presented separately as “Net income attributable to noncontrolling interests.” In the Company's Consolidated Balance Sheets, noncontrolling interests represent the ownership interests in the Company consolidated subsidiaries' net assets held by parties other than the Company. These ownership interests are presented separately as “Noncontrolling interests” within “Stockholders' Equity.” All 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 April 3, 2021, and include the 13 weeks ended April 3, 2021, and the 13 weeks ended March 28, 2020.

(c)    Cash, Cash Equivalents and Restricted Cash

The Company considers all short-term highly liquid instruments, with an original maturity of three months or less, to be cash equivalents. Cash balances are recorded net of book overdrafts when a bank right-of-offset exists. All other book overdrafts are recorded in accounts payable and the change in the related balance is reflected in operating activities on the Consolidated Statement of Cash Flows. In addition, the Company has bank overdrafts, which are considered a form of short-term financing with changes in the related balance reflected in financing activities in the Consolidated Statement of Cash Flows.

Restricted cash represents amounts required to be set aside as collateral for environmental claims and are insignificant to the Company.

(d)    Accounts Receivable and Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from customers’ non-payment of trade accounts receivable owed to the Company.  These trade receivables arise in the ordinary course of business from sales of finished product or services to the Company’s customers.  The estimate of
8


allowance for doubtful accounts is based upon the Company’s bad debt experience adjusted for differences in asset-specific risk characteristic, current economic conditions, and forecasts of future economic conditions.  If the financial condition of the Company’s customers deteriorates, resulting in the customers’ inability to pay the Company’s receivables as they come due, additional allowances for doubtful accounts may be required.

The Company has entered into agreements with third party banks to factor certain of the Company's trade receivables in order to enhance working capital by turning trade receivables into cash faster. Under these agreements, the Company sells certain selected customers’ trade receivables to third party banks without recourse for cash less a nominal fee. For the three months ended April 3, 2021 and March 28, 2020, the Company sold approximately $106.9 million and $84.5 million of its trade receivables and incurred approximately $0.3 million and $0.4 million in fees, which are recorded as interest expense, respectively.

(e)    Revenue Recognition

The Company recognizes revenue on sales when control of the promised finished product is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for the finished product. Service revenues are recognized when the service occurs.  Certain customers may be required to prepay prior to shipment in order to maintain payment protection related to certain foreign and domestic sales.  These amounts are recorded as unearned revenue and recognized when control of the promised finished product is transferred to the Company's customer.  See Note 19 (Revenue) to the Company's Consolidated Financial Statements included herein.

(f)    Foreign Currency Translation and Remeasurement

Foreign currency translation is included as a component of accumulated other comprehensive loss and reflects the adjustments resulting from translating the foreign currency denominated financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company's foreign subsidiaries is the currency of the primary economic environment in which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at fiscal period end exchange rates, including intercompany foreign currency transactions that are of long-term investment nature. Income and expense items are translated at average exchange rates occurring during the period. Changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains/(losses) in determining net income. The Company incurred net foreign currency translation losses of approximately $39.8 million and $65.1 million for the three months ended April 3, 2021 and March 28, 2020, respectively.

(g)    Leases

The Company accounts for leases in accordance with Accounting Standard Codification (“ASC”) Topic 842, leases. The Company determines if an arrangement is a lease at inception for which the Company recognizes the right-of-use (“ROU”) asset and a lease liability at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. In determining the lease liability, the Company applies a discount rate to the minimum lease payments within each lease. ASC 842 requires the Company to use the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate the Company's incremental borrowing rate over various terms, a comparable market yield curve consistent with the Company's credit quality is determined. The lease term for all of the Company's leases include the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise or when a triggering event occurs. The Company has elected to not recognize a ROU asset and lease liability with an initial term of 12 months or less at lease commencement. Operating leases are included on the Company's balance sheet as a ROU asset, current operating lease liabilities and long-term operating lease liabilities. For finance leases, the lease liability is initially measured in the same manner and date as for the operating leases, and is subsequently measured at amortized cost using the effective interest method. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt, net of current portion, but are not significant to the Company.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any direct costs incurred less any
9


lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of the lease incentives received. Some leases payments contain rent escalation clauses (including index-based escalations), initially measured using the index at the lease commencement date. The Company recognizes minimum rental expense on a straight-line basis based on the fixed components of the lease arrangement.

The Company uses the long-lived assets impairment guidance in ASC subtopic 360-10, Property, Plant and Equipment - Overall, to determine whether the ROU asset is impaired, and if so, the amount of the impairment loss to recognize. The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in the consolidated statement of operations.

(h)    Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

If it is at least reasonably possible that the estimate of the effect on the financial statements of a condition, situation, or set of circumstances that exist at the date of the financial statements will change in the near term due to one or more future confirming events, and the effect of the change would be material to the financial statements, the Company will disclose the nature of the uncertainty and include an indication that it is at least reasonably possible that a change in the estimate will occur in the near term.  If the estimate involves certain loss contingencies, the disclosure will also include an estimate of the probable loss or range of loss or state that an estimate cannot be made.

As a result of the current global COVID-19 pandemic, and related government imposed movement restrictions and initiatives implemented to reduce the global transmission of COVID-19, we have evaluated the potential impact to the Company's operations and for any indicators of potential triggering events that could indicate certain of the Company's assets may be impaired. Through the three months ended April 3, 2021, the Company has not observed any impairments of the Company's assets or a significant change in their fair value due to the COVID-19 pandemic.

(i)    Earnings Per Share

Basic income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares including non-vested and restricted shares outstanding during the period.  Diluted income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares outstanding during the period increased by dilutive common equivalent shares determined using the treasury stock method.
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Net Income per Common Share (in thousands, except per share data)
 Three Months Ended
April 3, 2021March 28, 2020
 IncomeSharesPer ShareIncomeSharesPer Share
Basic:      
Net Income attributable to Darling$151,766 162,925 $0.93 $85,510 163,474 $0.52 
Diluted:      
Effect of dilutive securities:      
Add: Option shares in the money and dilutive effect of non-vested stock awards 5,733   6,749  
Less: Pro forma treasury shares (909)  (2,296) 
Diluted:      
Net income attributable to Darling$151,766 167,749 $0.90 $85,510 167,927 $0.51 

For the three months ended April 3, 2021 and March 28, 2020, respectively, zero and 551,877 outstanding stock options were excluded from diluted income per common share as the effect was antidilutive. For the three months ended April 3, 2021 and March 28, 2020, respectively, 162,896 and 406,502 shares of non-vested stock and stock equivalents were excluded from diluted income per common share as the effect was antidilutive.

(3)    Investment in Unconsolidated Subsidiaries

On January 21, 2011, a wholly-owned subsidiary of Darling entered into a limited liability company agreement with a wholly-owned subsidiary of Valero Energy Corporation (“Valero”) to form Diamond Green Diesel Holdings LLC (“DGD” or the “DGD Joint Venture”). The DGD Joint Venture is owned 50% / 50% with Valero and was formed to design, engineer, construct and operate a renewable diesel plant located adjacent to Valero's refinery in Norco, Louisiana. The DGD Joint Venture reached mechanical completion and began the production of renewable diesel in late June 2013. Effective May 1, 2019, the limited liability company agreement was amended and restated for the purpose of updating the agreement in certain respects, including to remove certain provisions that were no longer relevant and to add new provisions relating to the DGD Joint Venture’s ongoing expansion project to construct a new, parallel facility located next to the existing facility.

Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):

(in thousands)March 31, 2021December 31, 2020
Assets:
Total current assets$477,840 $383,557 
Property, plant and equipment, net1,437,905 1,238,726 
Other assets39,171 36,082 
Total assets$1,954,916 $1,658,365 
Liabilities and members' equity:
Total current portion of long term debt$562 $517 
Total other current liabilities177,594 99,787 
Total long term debt8,702 8,705 
Total other long term liabilities8,722 3,758 
Total members' equity1,759,336 1,545,598 
Total liabilities and members' equity$1,954,916 $1,658,365 

11


Three Months Ended
(in thousands)March 31, 2021March 31, 2020
Revenues:
Operating revenues$431,633 $358,615 
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense
215,234 151,347 
Depreciation, amortization and accretion expense
11,687 11,774 
Total costs and expenses226,921 163,121 
Operating income204,712 195,494 
Other income58 461 
Interest and debt expense, net(320)(315)
Net income$204,450 $195,640 

As of April 3, 2021, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $879.7 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately $102.2 million and $97.8 million for the three months ended April 3, 2021 and March 28, 2020, respectively. In December 2019, the blender tax credits for calendar year 2018 and 2019 were retroactively reinstated by the U.S. Congress. In addition, blenders tax credits were extended for calendar years 2020, 2021 and 2022. For the three months ended March 31, 2021 and March 31, 2020, the DGD Joint Venture recorded approximately $79.0 million and $80.0 million of blenders tax credits, respectively. In the three months ended April 3, 2021, the Company did not receive any dividend distributions from the DGD Joint Venture.

In addition to the DGD Joint Venture, the Company has investments in other unconsolidated subsidiaries that are insignificant to the Company.

(4)    Inventories

A summary of inventories follows (in thousands):
        
 April 3, 2021January 2, 2021
Finished product$250,237 $233,044 
Work in process87,219 87,223 
Raw material35,229 36,746 
Supplies and other47,974 48,909 
 $420,659 $405,922 

(5)    Intangible Assets

The gross carrying amount of intangible assets not subject to amortization and intangible assets subject to amortization
is as follows (in thousands):    
12


 April 3, 2021January 2, 2021
Indefinite Lived Intangible Assets  
Trade names$54,184 $55,349 
 54,184 55,349 
Finite Lived Intangible Assets:  
Routes393,937 397,342 
Permits481,959 494,191 
Non-compete agreements645 3,300 
Trade names65,675 65,675 
Royalty, consulting, land use rights and leasehold25,616 25,909 
 967,832 986,417 
Accumulated Amortization:
Routes(206,137)(203,392)
Permits(314,741)(315,246)
Non-compete agreements(355)(2,981)
Trade names(41,125)(39,491)
Royalty, consulting, land use rights and leasehold(7,119)(6,976)
(569,477)(568,086)
Total Intangible assets, less accumulated amortization$452,539 $473,680 

Gross intangible routes, permits, trade names, non-compete agreements and other intangibles decreased in fiscal 2021 as a result of approximately $9.5 million of fully amortized asset retirements and a decrease from foreign currency translation. Amortization expense for the three months ended April 3, 2021 and March 28, 2020, was approximately $17.0 million and $18.2 million, respectively.

(6)    Goodwill

Changes in the carrying amount of goodwill (in thousands):
 Feed IngredientsFood IngredientsFuel IngredientsTotal
Balance at January 2, 2021   
Goodwill$830,321 $351,296 $126,578 $1,308,195 
Accumulated impairment losses(15,914)(461)(31,580)(47,955)
 814,407 350,835 94,998 1,260,240 
Goodwill acquired during year40  161 201 
Foreign currency translation(5,631)(9,685)(3,883)(19,199)
Balance at April 3, 2021   
Goodwill824,730 341,611 122,856 1,289,197 
Accumulated impairment losses(15,914)(461)(31,580)(47,955)
 $808,816 $341,150 $91,276 $1,241,242 

(7)    Accrued Expenses
 
Accrued expenses consist of the following (in thousands):

 April 3, 2021January 2, 2021
Compensation and benefits
$99,108 $