EMPLOYEE BENEFIT PLANS

The Company has retirement and pension plans covering substantially all of its employees. Most retirement benefits are provided by the Company under separate final-pay noncontributory and contributory defined benefit and defined contribution plans for all salaried and hourly employees (excluding those covered by union-sponsored plans) who meet service and age requirements. Defined benefits are based principally on length of service and earnings patterns during the five years preceding retirement. During the third quarter of fiscal 2011, as part of the initiative to combine the Darling and Griffin retirement benefit programs, the Company's Board of Directors authorized the Company to proceed with the restructuring of its retirement benefit program effective January 1, 2012, to include the closing of Darling's salaried and hourly defined benefit plans to new participants as well as the freezing of service and wage accruals thereunder effective December 31, 2011 (a curtailment of these plans for financial reporting purposes) and the enhancing of benefits under the Company's defined contribution plans. Several locations of the Company-sponsored hourly union plan have been curtailed as a result of collective bargaining renewals for those sites.

Effective January 1, 2012, the Griffin hourly 401(k) plan merged into the Darling International Inc. Hourly 401(k) Savings Plan. Effective January 1, 2012, all of the Company’s hourly employees are eligible to participate in this plan, which allows for elective deferrals, an employer match equal to 25% up to 6% of a participants deferrals each pay period and an employer contribution based on age (ranging from 2-5% of compensation per year). Previously, the Company's employer match was equal to 100% of the first $10 per pay period deferred by a participant, with a maximum of $520 per year, and an employer contribution equal to $520 per year. Effective January 1, 2012, Darling International Inc.'s Hourly 401(k) Savings Plan accepted the transfer of assets and liabilities of the hourly employees of Griffin that had account balances in the Griffin plans which existed prior to January 1, 2012.

In addition, effective January 1, 2012, the Griffin salaried 401(k) plan merged into the Darling International Inc. Salaried 401(k) Savings Plan, a defined contribution plan, which was amended and now includes an employer match equal to 25% up to 6% of a participants deferrals each pay period and an employer contribution based on age (ranging from 3-6% of compensation per year). Previously, the Darling International Inc. Salaried 401(k) Savings Plan included an employer contribution based on age (ranging from 2-5% of compensation per year). Effective January 1, 2012, Darling International Inc.'s Salaried 401(k) Savings Plan accepted the transfer of assets and liabilities of the salaried employees of Griffin that had account balances in the Griffin plans which existed prior to January 1, 2012.

The Company's matching portion and annual employer contribution to the Darling International Inc. Hourly 401(k) Savings and Darling International Inc. Salaried 401(k) Savings Plans for the fiscal 2013, 2012 and 2011 was approximately $8.2 million, $7.2 million and $2.2 million, respectively.

Under Griffin's old defined contribution plans the Company made matching contributions for fiscal 2011 of approximately $0.5 million.

As a result of the Rothsay Acquisition, certain employees of MFI became employees of the Company. Pursuant to the terms of the purchase and sale agreement, the pension benefits of these employees in respect to service prior to October 28, 2013 remain the responsibility of MFI. Benefits and rights accruing to these employees on and after October 28, 2013 (including earning increases on benefits accrued for non-Quebec employees prior to October 28, 2013) are the responsibility of the Company. The three plans created with an initial date of October 28, 2013 are the Darling International Canada Inc. Pension Plan for Eligible Salaried and Hourly Non-Union Employees (the "DICI Non-Union Plan"); the Darling International Canada Inc. Pension Plan for Eligible Unionized Employees; and the Darling Supplemental Employees Retirement Plan. In addition, the DICI Non-Union Plan includes a defined contribution component. In fiscal 2013, Rothsay made employer contributions of approximately $0.1 million.

The Company recognizes the over-funded or under-funded status of the Company's defined benefit post-retirement plans as an asset or liability in the Company's balance sheet, with changes in the funded status recognized through comprehensive income in the year in which they occur.

The following table sets forth the plans’ funded status for the Company's domestic and foreign defined benefit plans and amounts recognized in the Company's consolidated balance sheets based on the measurement date (December 28, 2013 and December 29, 2012) (in thousands):



	December 28, 2013			December 29, 2012
Change in projected benefit obligation:
Projected benefit obligation at beginning of period	$	137,797		$	123,553
Acquisition	4,102			—
Service cost	507			326
Interest cost	5,307			5,451
Employee contributions	20			—
Actuarial loss	(12,904		)	13,084
Benefits paid	(4,761		)	(4,617		)
Other	(102		)	—
Projected benefit obligation at end of period	129,966			137,797

Change in plan assets:
Fair value of plan assets at beginning of period	106,519			96,235
Actual return on plan assets	13,147			13,026
Employer contributions	3,973			1,875
Employee contributions	20			—
Benefits paid	(4,761		)	(4,617		)
Fair value of plan assets at end of period	118,898			106,519

Funded status	(11,068		)	(31,278		)
Net amount recognized	$	(11,068	)	$	(31,278	)

Amounts recognized in the consolidated balance sheets consist of:
Non-current assets	$	29		$	—
Non-current liability	(11,097		)	(31,278		)
Net amount recognized	$	(11,068	)	$	(31,278	)

Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss	$	26,738		$	50,714
Prior service cost	32			174
Net amount recognized (a)	$	26,770		$	50,888


(a)	Amounts do not include deferred taxes of $10.4 million and $19.4 million at December 28, 2013 and December 29, 2012, respectively.

The amounts included in "Other" in the above table reflect the impact of foreign exchange translation for plans in Canada. The Company's domestic pension plan benefits comprise approximately 97% of the projected benefit obligation. Additionally, the Company has made required and tax deductible discretionary contributions to its U.S. pension plans in Fiscal 2013 and Fiscal 2012 of approximately $4.0 million and $1.9 million, respectively. All of these contributions were made to the domestic plans.



	December 28, 2013		December 29, 2012
Projected benefit obligation	$	129,966	$	137,797
Accumulated benefit obligation	125,939		137,797
Fair value of plan assets	118,898		106,519

Net pension cost includes the following components (in thousands):



	December 28, 2013			December 29, 2012			December 31, 2011
Service cost	$	507		$	326		$	1,178
Interest cost	5,307			5,451			6,052
Expected return on plan assets	(7,277		)	(6,709		)	(6,888		)
Net amortization and deferral	5,261			4,845			2,814
Curtailment	83			14			63
Net pension cost	$	3,881		$	3,927		$	3,219

Amounts recognized in accumulated other comprehensive income (loss) for the year ended (in thousands):



	2013		2012
Actuarial (loss)/gain recognized:
Reclassification adjustments	$	3,184	$	2,912
Actuarial (loss)/gain recognized during the period	11,869		(4,145		)
Prior service (cost) credit recognized:
Reclassification adjustments	87		64
Prior service cost arising during the period	—		—
	$	15,140	$	(1,169	)

The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic pension cost in fiscal 2014 is as follows (in thousands):



	2014
Net actuarial loss	$	2,078
Prior service cost	16
	$	2,094

Weighted average assumptions used to determine benefit obligations were:



	December 28, 2013	December 29, 2012	December 31, 2011
Discount rate	4.66%	3.90%	4.50%
Rate of compensation increase	3.00%	—%	—%

Weighted average assumptions used to determine net periodic benefit cost for the employee benefit pension plans were:



	December 28, 2013	December 29, 2012	December 31, 2011
Discount rate	3.96%	4.50%	5.55%
Rate of increase in future compensation levels	—%	—%	4.16%
Expected long-term rate of return on assets	7.35%	7.35%	7.85%

Consideration was made to the long-term time horizon for the plans' benefit obligations as well as the related asset class mix in determining the expected long-term rate of return. Historical returns are also considered, over the long-term time horizon, in determining the expected return. Considering the overall asset mix of approximately 60% equity and 40% fixed income, several years in the last ten years (except for 2008) having strong double digit returns as well as several years of single digit losses, the Company believes it is reasonable to expect a long-term rate of return of 7.35% for the plans' investments as a whole.

Plan Assets

The Company's pension plan weighted-average asset allocations at December 28, 2013 and December 29, 2012, by asset category, are as follows:



	Plan Assets at
Asset Category	December 28, 2013	December 29, 2012
Equity Securities	51.7%	61.3%
Debt Securities	48.3%	38.7%
Total	100.0%	100.0%

The initial allocation of the Darling Canada pension plans will be invested in a diversified mix of global and Canadian equity and fixed income instruments. The presumed allocation will approximate the percentages below:



Canada equity	30%
Global equity	30%
Canadian fixed income	35%
Cash	5%

The investment objectives have been established in conjunction with a comprehensive review of the current and projected financial requirements. The primary investment objectives are: 1) to have the ability to pay all benefit and expense obligations when due; 2) to maximize investment returns within reasonable and prudent levels of risk in order to minimize contributions; and 3) to maintain flexibility in determining the future level of contributions.

Investment results are the most critical element in achieving funding objectives, while reliance on contributions is a secondary element.

The investment guidelines are based upon an investment horizon of greater than ten years; therefore, interim fluctuations are viewed with this perspective. The strategic asset allocation is based on this long-term perspective and the plans' funded status. However, because the participants’ average age is somewhat older than the typical average plan age, consideration is given to retaining some short-term liquidity. Analysis of the cash flow projections of the plans indicates that benefit payments will continue to exceed contributions. The results of a thorough asset-liability study completed during 2012 established a dynamic asset allocation glide path (the "Glide Path") by which the plans' asset allocations are determined. The Glide Path designates intervals based on funded status which contain a corresponding allocation to equities/real assets and fixed income. As the plans' funded status improves, the allocations become more conservative, and the opposite is true when the funded status declines.

Based upon the plans’ funded status, time horizon, risk tolerances, performance expectations, asset class constraints and asset-liability study results, target asset allocation ranges are as follows:



Fixed Income	35% - 80%
Equities	20% - 65%

The fixed income allocation is primarily invested in corporate and government bonds denominated in U.S. dollar, private and publicly traded mortgages, private placement debt and cash equivalents. The average duration of the issues is managed to closely match the duration of the plans' liabilities. The portfolio is expected to be well-diversified.

The domestic equity allocation is invested in stocks traded on one of the U.S. stock exchanges. Securities convertible into such stocks, convertible bonds and preferred stock, may also be purchased. The majority of the domestic equities are invested in mutual funds that are well-diversified among growth and value stocks categorized in large, mid and small cap asset classes. By definition, small cap investments carry greater risk than large and mid cap, but also are expected to create greater returns over time than large and mid cap. By definition large cap investments carry less risk than small and mid cap, and are expected to return less than small and mid cap over time. By definition mid cap investments fall between small and large cap stocks concerning riskiness and expected return. Small company definitions fluctuate with market levels but generally will be considered companies with market capitalizations between $300 million and $2 billion. The portfolio will be diversified in terms of individual company securities and industries. No individual equity or individual fixed income investment comprised more than 1.5% of the defined benefit plans' total assets (excluding U.S. government issues).

The international equity allocation is invested in companies whose stock is traded outside the U.S. and/or companies that conduct the major portion of their business outside of the U.S. The portfolio may invest in ADR's. The emerging market portion of the international equity investment is held below 10% due to greater volatility in the asset class. The portfolio is well-diversified in terms of companies, industries and countries.

The diversified asset portion of the allocation will invest in securities with a goal to outpace inflation and preserve their value. The securities in this allocation may consist of inflation-indexed bonds, securities of real estate companies, commodity index-linked notes, fixed-income securities, securities of natural resource companies, master limited partnerships, publicly-listed infrastructure companies, and floating rate debt.

All investment objectives are expected to be achieved over a market cycle anticipated to be a period of five to seven years. Reallocations are performed on a monthly basis to retain target allocation ranges. On a quarterly basis the plans' funded status will be recalculated to determine which Glide Path interval allocation is appropriate.

The following table presents fair value measurements for the Company's defined benefit plans’ assets as categorized using the fair value hierarchy under FASB authoritative guidance (in thousands):



	Total		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands of dollars)	Fair Value		(Level 1)		(Level 2)		(Level 3)
Balances as December 29, 2012
Fixed Income:
Long Term	$	40,255	$	14,064	$	26,191	$	—
Short Term	954		542		412		—
Equity Securities:
Domestic equities	44,997		43,563		1,434		—
International equities	20,313		19,551		762		—
Totals	$	106,519	77,720		$	28,799	$	—

Balances as December 28, 2013

Fixed Income:
Long Term	$	60,654	$	22,906	$	37,748	$	—
Short Term	771		—		771		—
Equity Securities:
Domestic equities	40,028		38,137		1,891		—
International equities	17,445		16,465		980		—
Totals	$	118,898	$	77,508	$	41,390	$	—

During fiscal 2010 the Company increased its pension investment options allowing for investing directly into mutual funds whereby the Company believes it gives the pension plan assets more options and a greater long term return potential. As a result the Company has transferred its pension assets in fiscal 2010 from pooled separate accounts

("PSA") accounts to assets comprised primarily of mutual funds, which are publicly traded in an active market. The particular shares used in the defined benefit plans are either retirement plan shares or A-shares with no loads. The fair value of each mutual fund is based on the market value of the underlying investments. In fiscal 2013, the Glide Path directed the Company to invest in certain PSA's in an effort to minimize the plans' funded status variability as compared to fiscal 2012.

Contributions

The Company's funding policy for employee benefit pension plans is to contribute annually not less than the minimum amount required nor more than the maximum amount that can be deducted for federal income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future.

Based on current actuarial estimates, the Company expects to make payments of approximately $2.0 million to meet funding requirements for its pension plans in fiscal 2014.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):



Year Ending	Pension Benefits
2014	$	5,770
2015	6,179
2016	6,444
2017	6,681
2018	7,002
Years 2019 – 2023	39,800

Multiemployer Pension Plans

The Company participates in various multiemployer pension plans which provide defined benefits to certain employees covered by labor contracts. These plans are not administered by the Company and contributions are determined in accordance with provisions of negotiated labor contracts to meet their pension benefit obligations to their participants. The Financial Accounting Standards Board ("FASB") issued guidance requiring companies to provide additional disclosures related to individually significant multiemployer pension plans. The Company's contributions to each individual multiemployer plan represent less than 5% of the total contributions to each such plan. Based on the most currently available information, the Company has determined that, if a withdrawal were to occur, withdrawal liabilities on two of the plans in which the Company currently participates could be material to the Company. The following table provides more detail on these two significant multiemployer plans (contributions in thousands):



											Expiration
Pension	EIN Pension	Pension Protection Act Zone Status		FIP/RP Status Pending/	Contributions						Date of Collective Bargaining
Fund	Plan Number	2013	2012	Implemented	2013		2012		2011		Agreement
Western Conference of Teamsters Pension Plan	91-6145047 / 001	Green	Green	No	$	1,254	$	1,371	$	1,386	May 2016 (b)
Central States, Southeast and Southwest Areas Pension Plan (a)	36-6044243 / 001	Red	Red	Yes	782		746		705		April 2016 (c)
All other multiemployer plans					1,113		1,083		1,009
		Total Company Contributions			$	3,149	$	3,200	$	3,100


(a)	In July 2005 this plan received a 10 year extension from the IRS for amortizing unfunded liabilities.


(b)	The Company has several plants that participate in the Western Conference of Teamsters Pension Plan under collective bargaining agreements that require minimum funding contributions. Certain of these agreements have expired and are being renegotiated with others having expiration dates through May 31, 2016.


(c)	The Company has several processing plants that participate in the Central States, Southeast and Southwest Areas Pension Plan under collective bargaining agreements that require minimum funding contributions. Certain of these agreements have expired and are being renegotiated with others having expiration dates through April 30, 2016.

With respect to the other multiemployer pension plans in which the Company participates and which are not individually significant, four plans have certified as critical or red zone, three plan has certified as endangered or yellow zone as defined by the Pension Protection Act of 2006. The Company's portion of contributions to all plans amounted to $3.1 million, $3.2 million and $3.1 million for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, respectively.

In June 2009, the Company received a notice of a mass withdrawal termination and a notice of initial withdrawal liability from a multiemployer plan in which it participated. The Company had anticipated this event and as a result had accrued approximately $3.2 million as of January 3, 2009 based on the most recent information that was probable and estimable for this plan. The plan had given a notice of redetermination liability in December 2009. In fiscal 2010, the Company received further third party information confirming the future payout related to this multiemployer plan. As a result, the Company reduced its liability to approximately $1.2 million. In fiscal 2010, another underfunded multiemployer plan in which the Company participates gave notification of partial withdrawal liability. As of December 28, 2013, the Company has an accrued liability of approximately $0.9 million representing the present value of scheduled withdrawal liability payments under this multiemployer plan. While the Company has no ability to calculate a possible current liability for under-funded multiemployer plans that could terminate or could require additional funding under the Pension Protection Act of 2006, the amounts could be material.