Investment in Unconsolidated Subsidiary

12 Months Ended

Dec. 28, 2019

INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES

The Company announced on January 21, 2011 that a wholly-owned subsidiary of Darling entered into a limited liability company agreement with Valero to form 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 (the “DGD Facility”), which as result of its recently expanded capacity is now capable of processing approximately 20,000 barrels per day of input feedstock to produce renewable diesel fuel and certain other co-products, and is 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.

In 2019, the Company continued to evaluate operational developments and the impact of anticipated significant expansion of the DGD Joint Venture. This evaluation was impactful to the consideration of how the Company most appropriately reflects its share of equity income from the DGD Joint Venture. Based on the Company's analysis, it was determined that the DGD Joint Venture has evolved into an integral and integrated part of the Company's ongoing operations. The Company determined this justifies a more meaningful and transparent presentation of equity in net income of the DGD Joint Venture as a component of the Company's operating income. As a result, the Company has reclassified its equity in net income of the DGD Joint Venture to operating income for all periods presented.

Selected financial information for the Company's DGD Joint Venture is as follows:



(in thousands)	December 31, 2019		December 31, 2018
Assets:
Total current assets	$	668,026	$	186,258
Property, plant and equipment, net	713,489		576,384
Other assets	30,710		24,601
Total assets	$	1,412,225	$	787,243
Liabilities and members' equity:
Total current portion of long term debt	$	341	$	189
Total other current liabilities	75,802		40,619
Total long term debt	8,742		8,485
Total other long term liabilities	4,422		539
Total members' equity	1,322,918		737,411
Total liabilities and member's equity	$	1,412,225	$	787,243



	Year Ended December 31,
(in thousands)	2019			2018			2017
Revenues:
Operating revenues	$	1,217,504		$	677,663		$	633,908
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	438,672			329,636			547,512
Depreciation, amortization and accretion expense	50,767			29,434			28,955
Operating income	728,065			318,593			57,441
Other income	2,121			1,919			1,343
Interest and debt expense, net	(1,282		)	(955		)	(2,306		)
Net income	$	728,904		$	319,557		$	56,478

As of December 28, 2019, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $661.5 million on the consolidated balance sheet and has recorded approximately $364.5

million, $159.8 million and $28.2 million in equity net income of Diamond Green Diesel for the years ended December 28, 2019, December 29, 2018 and December 30, 2017, respectively. Biodiesel blenders registered with the Internal Revenue Service were eligible for a tax incentive in the amount of $1.00 per gallon of renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. The blenders tax credit for calendar year 2019 and 2018 was approved by the U.S. Congress in December 2019. In February 2018, the blenders tax credits for calendar year 2017 were retroactively reinstated by the U.S. Congress. Fiscal 2017 results do not include any blenders tax credits, while in fiscal 2019, the DGD Joint Venture recorded approximately $274.7 million for 2019 blenders tax credits and approximately $155.9 million for 2018 blenders tax credits. In fiscal 2018, the DGD Joint Venture recorded approximately $160.4 million for the 2017 reinstated blenders tax credits. In addition, the Company received $67.5 million, $65.0 million and $25.0 million for each of the years ended December 28, 2019, December 29, 2018 and December 30, 2017, in 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.