EMPLOYEE BENEFIT PLANS

The Company has retirement and pension plans covering a substantial number of its domestic and foreign 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. Although various defined benefit formulas exist for employees, generally these are based on length of service and earnings patterns during employment. Effective January 1, 2012, the Company's Board of Directors authorized the Company to proceed with the restructuring of its domestic retirement benefit program to include the closing of Darling's domestic 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 domestic defined contribution plans. The Company-sponsored domestic hourly union plan has not been curtailed; however, several locations of the Company-sponsored domestic hourly union plan have been curtailed as a result of collective bargaining renewals for those sites.

As a result of the Rothsay Acquisition, certain employees of MFI became employees of the Company. Pursuant to the terms of the Acquisition Agreement between MFI and Darling dated August 23, 2013, 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.

Additionally, as a result of the VION Acquisition, employees of VION Ingredients became employees of Darling Ingredients International. Pursuant to the terms of the Sale and Purchase Agreement dated October 3, 2013, as amended, between Darling and VION, Darling assumed approximately $28.9 million of unfunded pension and insignificant postretirement benefit plan obligations.

The Company maintains defined contribution plans both domestically and at its foreign entities. The Company's matching portion and annual employer contributions to the Company's domestic defined contribution plans for fiscal 2014, 2013 and 2012 were approximately $9.2 million, $8.2 million and $7.2 million, respectively. The Company's matching portion and annual employer contributions to the Company's foreign defined contribution plans for fiscal 2014 and 2013 were approximately $3.5 million and $0.1 million, respectively.

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 (January 3, 2015 and December 28, 2013) (in thousands):



	January 3, 2015			December 28, 2013
Change in projected benefit obligation:
Projected benefit obligation at beginning of period	$	129,966		$	137,797
Acquisitions	199,996			4,102
Service cost	5,208			507
Interest cost	13,214			5,307
Employee contributions	1,946			20
Plan amendments	(1,371		)	—
Actuarial loss	88,592			(12,904		)
Benefits paid	(13,045		)	(4,761		)
Other	(29,364		)	(102		)
Projected benefit obligation at end of period	395,142			129,966

Change in plan assets:
Fair value of plan assets at beginning of period	118,898			106,519
Acquisitions	171,117			—
Actual return on plan assets	67,090			13,147
Employer contributions	7,061			3,973
Employee contributions	1,946			20
Benefits paid	(13,045		)	(4,761		)
Other	(24,847		)	—
Fair value of plan assets at end of period	328,220			118,898

Funded status	(66,922		)	(11,068		)
Net amount recognized	$	(66,922	)	$	(11,068	)

Amounts recognized in the consolidated balance sheets consist of:
Noncurrent assets	$	—		$	29
Current liability	(993		)	—
Noncurrent liability	(65,929		)	(11,097		)
Net amount recognized	$	(66,922	)	$	(11,068	)

Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss	$	59,207		$	26,738
Prior service cost/(credit)	(1,131		)	32
Net amount recognized (a)	$	58,076		$	26,770


(a)	Amounts do not include deferred taxes of $21.3 million and $10.4 million at January 3, 2015 and December 28, 2013, respectively.

The amounts included in "Other" in the above table reflect the impact of foreign exchange translation for plans in Argentina, Brazil, Belgium, Canada, France, Germany, Japan, Netherlands and United Kingdom. The Company's domestic pension plan benefits comprise approximately 37% and 97% of the projected benefit obligation for fiscal 2014 and fiscal 2013, respectively. Additionally, the Company has made required and tax deductible discretionary contributions to its domestic pension plans in fiscal 2014 and fiscal 2013 of approximately $0.3 million and approximately $4.0 million, respectively. The Company made required and tax deductible discretionary contributions to its foreign pension plans in fiscal 2014 of approximately $6.8 million. In fiscal 2013 no contributions were made to the foreign plans.



	January 3, 2015		December 28, 2013
Projected benefit obligation	$	395,142	$	129,966
Accumulated benefit obligation	376,043		125,939
Fair value of plan assets	328,220		118,898

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



	January 3, 2015			December 28, 2013			December 29, 2012
Service cost	$	5,208		$	507		$	326
Interest cost	13,214			5,307			5,451
Expected return on plan assets	(14,439		)	(7,277		)	(6,709		)
Net amortization and deferral	2,094			5,261			4,845
Curtailment	7			83			14
Net pension cost	$	6,084		$	3,881		$	3,927

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



	2014			2013
Actuarial (loss)/gain recognized:
Reclassification adjustments	$	1,272		$	3,184
Actuarial (loss)/gain recognized during the period	(22,546		)	11,869
Prior service (cost) credit recognized:
Reclassification adjustments	14			87
Prior service cost arising during the period	879			—
	$	(20,381	)	$	15,140

The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic pension cost in fiscal 2015 is as follows (in thousands):



	2015
Net actuarial loss	$	5,142
Prior service cost	(81		)
	$	5,061

Weighted average assumptions used to determine benefit obligations were:



	January 3, 2015	December 28, 2013	December 29, 2012

Discount rate	2.79%	4.66%	3.90%
Rate of compensation increase	1.82%	3.00%	—%

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



	January 3, 2015	December 28, 2013	December 29, 2012
Discount rate	4.15%	3.96%	4.50%
Rate of increase in future compensation levels	1.70%	—%	—%
Expected long-term rate of return on assets	5.06%	7.35%	7.35%

Consideration was made to the long-term time horizon for the (U.S. and Canada's) 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 with equity exposure on a declining trend since the implementation of the glide path for two of the U.S. plans the Company believes it is reasonable to expect a long-term rate of return of 7.1% for the (U.S. and Canada's) plans' investments as a whole. The remaining foreign plans' assets are principally invested under insurance contracts arrangements which have weighted average expected long-term rate of returns of 3.8%.

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; however, contributions are used as a supplemental source of funding as deemed appropriate.

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 U.S. 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 U.S. plans' funded status improves, the allocations become more conservative, and the opposite is true when the funded status declines.



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

The equity allocation is invested in stocks traded on one of the U.S. stock exchanges or in foreign companies whose stock is traded outside the U.S. and/or companies that conduct the major portion of their business outside the U.S. Securities convertible into such stocks, convertible bonds and preferred stock, may also be purchased. The portfolio may invest in American Depository Receipts ("ADR"). The majority of the equities are invested in mutual funds that are well-diversified amount growth and value stocks, as well as large, mid, and small cap assets. This mix is balanced based on the understanding that large cap stocks are historically less volatile than small cap stocks: however, smaller cap stocks have historically outperformed larger cap stocks. The emerging markets portion of the equity allocation is held below 10% due to greater volatility in the asset class. Risk adjusted returns are the primary driver of allocation choices within these asset classes. 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 out pace 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 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	$	—

Balances as January 3, 2015

Fixed Income:
Long Term	$	71,820	$	23,619	$	48,201	$	—
Short Term	1,419		—		1,419		—
Equity Securities:
Domestic equities	41,813		35,946		5,867		—
International equities	18,259		16,953		1,306		—
Insurance contracts	194,909		—		—		194,909
Totals	$	328,220	$	76,518	$	56,793	$	194,909

The majority of the U.S. and Canada plan pension assets are invested in mutual funds; however, some assets are invested in pooled separate accounts ("PSA") which have similar mutual fund counterparts. PSA accounts are generally used to access lower fund management expenses when compared to their mutual fund counterparts. The mutual funds are generally invested in institutional shares, retirement shares, or A-shares with no loads. The fair value of each mutual fund and PSA is based on the market value of the underlying investments. The majority of the foreign pension assets are held under insurance contracts where the investment risk for the accumulated benefit obligation rests with the insurer, which the Company has no specific detailed asset information.

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 $6.5 million to meet funding requirements for its domestic and foreign pension plans in fiscal 2015.

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
2015	$	13,344
2016	14,379
2017	13,942
2018	14,466
2019	15,748
Years 2020 – 2024	87,338

Multiemployer Pension Plans

The Company participates in various multiemployer pension plans which provide defined benefits to certain employees covered by labor contracts in the United States. 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 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	2014	2013	Implemented	2014		2013		2012		Agreement
Western Conference of Teamsters Pension Plan	91-6145047 / 001	Green	Green	No	$	1,384	$	1,254	$	1,371	January 2017 (b)
Central States, Southeast and Southwest Areas Pension Plan (a)	36-6044243 / 001	Red	Red	Yes	876		782		746		May 2016 (c)
All other multiemployer plans					1,042		1,113		1,083
		Total Company Contributions			$	3,302	$	3,149	$	3,200


(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 January 1, 2017.


(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 May 1, 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, two plan have certified as endangered or yellow zone and one plan has certified as seriously endangered or orange zone, as defined by the Pension Protection Act of 2006. The Company's portion of contributions to all plans amounted to $3.3 million, $3.1 million and $3.2 million for the years ended January 3, 2015, December 28, 2013 and December 29, 2012, 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 January 3, 2015, the Company has an accrued liability of approximately $0.8 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.