Other Comprehensive Income

9 Months Ended

Sep. 26, 2020

Other Comprehensive Income/(Loss)

The Company follows FASB authoritative guidance for reporting and presentation of comprehensive income/(loss) and its components. Other comprehensive income/(loss) is derived from adjustments that reflect pension adjustments, corn option adjustments, foreign exchange forward adjustments, heating oil swap adjustments and foreign currency translation adjustments.

In the first nine months of fiscal 2020, the Company's DGD Joint Venture entered into heating oil derivatives that were deemed to be cash flow hedges. As a result, the Company has accrued the other comprehensive income/(loss) portion belonging to Darling with an offset to the investment in DGD as required by FASB ASC Topic 323.

The components of other comprehensive income/(loss) and the related tax impacts for the three and nine months ended September 26, 2020 and September 28, 2019 are as follows (in thousands):


	Three Months Ended
	Before-Tax				Tax (Expense)				Net-of-Tax
	Amount				or Benefit				Amount
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Defined benefit pension plans
Amortization of prior service (cost)/benefit	$	9	$	9	$	(2)	$	(2)	$	7	$	7
Amortization of actuarial loss	854		1,146		(213)		(294)		641		852

Total defined benefit pension plans	863		1,155		(215)		(296)		648		859








Corn option derivatives
Gain/(loss) reclassified to net income	229		206		(57)		(54)		172		152
Gain/(loss) activity recognized in other comprehensive income/(loss)	(3,588)		542		898		(141)		(2,690)		401
Total corn option derivatives	(3,359)		748		841		(195)		(2,518)		553
Heating oil derivatives
Gain/(loss) activity recognized in other comprehensive income/(loss)	1,992		(2,268)		(498)		585		1,494		(1,683)
Total heating oil derivatives	1,992		(2,268)		(498)		585		1,494		(1,683)
Foreign exchange derivatives
Gain/(loss) reclassified to net income	(5,317)		1,178		385		(362)		(4,932)		816
Gain/(loss) activity recognized in other comprehensive income/(loss)	7,486		(8,405)		(1,142)		2,645		6,344		(5,760)
Total foreign exchange derivatives	2,169		(7,227)		(757)		2,283		1,412		(4,944)

Foreign currency translation	39,237		(48,954)		(1,383)		1,328		37,854		(47,626)

Other comprehensive income/(loss)	$	40,902	$	(56,546)	$	(2,012)	$	3,705	$	38,890	$	(52,841)


	Nine Months Ended
	Before-Tax				Tax (Expense)				Net-of-Tax
	Amount				or Benefit				Amount
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Defined benefit pension plans
Amortization of prior service (cost)/benefit	$	25	$	27	$	(6)	$	(7)	$	19	$	20
Amortization of actuarial loss	2,562		3,439		(638)		(883)		1,924		2,556

Total defined benefit pension plans	2,587		3,466		(644)		(890)		1,943		2,576








Corn option derivatives
Gain/(loss) reclassified to net income	1,168		169		(292)		(44)		876		125
Gain/(loss) activity recognized in other comprehensive income/(loss)	(1,939)		609		485		(159)		(1,454)		450
Total corn option derivatives	(771)		778		193		(203)		(578)		575
Heating oil derivatives
Gain/(loss) activity recognized in other comprehensive income/(loss)	4,565		606		(1,141)		(156)		3,424		450
Total heating oil derivatives	4,565		606		(1,141)		(156)		3,424		450
Foreign exchange derivatives
Gain/(loss) reclassified to net income	(10,564)		1,465		1,690		(473)		(8,874)		992
Gain/(loss) activity recognized in other comprehensive income/(loss)	8,112		(9,485)		(1,298)		3,063		6,814		(6,422)
Total foreign exchange derivatives	(2,452)		(8,020)		392		2,590		(2,060)		(5,430)

Foreign currency translation	(5,798)		(37,695)		(1,445)		1,509		(7,243)		(36,186)

Other comprehensive income/(loss)	$	(1,869)	$	(40,865)	$	(2,645)	$	2,850	$	(4,514)	$	(38,015)

The following table presents the amounts reclassified out of each component of other comprehensive (income)/loss, net of tax for the three and nine months ended September 26, 2020 and September 28, 2019 as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019		Statement of Operations Classification
Derivative instruments

Foreign exchange contracts	$	5,317	$	(1,178)	$	10,564	$	(1,465)	Net sales

Corn option derivatives	(229)		(206)		(1,168)		(169)		Cost of sales and operating expenses
	5,088		(1,384)		9,396		(1,634)		Total before tax
	(328)		416		(1,398)		517		Income taxes
	4,760		(968)		7,998		(1,117)		Net of tax
Defined benefit pension plans
Amortization of prior service cost	$	(9)	$	(9)	$	(25)	$	(27)	(a)
Amortization of actuarial loss	(854)		(1,146)		(2,562)		(3,439)		(a)

	(863)		(1,155)		(2,587)		(3,466)		Total before tax
	215		296		644		890		Income taxes
	(648)		(859)		(1,943)		(2,576)		Net of tax
Total reclassifications	$	4,112	$	(1,827)	$	6,055	$	(3,693)	Net of tax

(a)These items are included in the computation of net periodic pension cost. See Note 14 (Employee Benefit Plans) to the Company's Consolidated Financial Statement included herein for additional information.

The following table presents changes in each component of accumulated other comprehensive income/(loss) as of September 26, 2020 as follows (in thousands):


	Nine Months Ended September 26, 2020
	Foreign Currency		Derivative		Defined Benefit
	Translation		Instruments		Pension Plans		Total
Accumulated Other Comprehensive loss December 28, 2019, attributable to Darling, net of tax	$	(282,338)	$	(5,505)	$	(34,004)	$	(321,847)
Other comprehensive income/(loss) before reclassifications	(7,243)		8,784		—		1,541
Amounts reclassified from accumulated other comprehensive loss	—		(7,998)		1,943		(6,055)

Net current-period other comprehensive income/(loss)	(7,243)		786		1,943		(4,514)
Noncontrolling interest	(753)		—		—		(753)
Accumulated Other Comprehensive loss September 26, 2020, attributable to Darling, net of tax	(288,828)		$	(4,719)	$	(32,061)	$	(325,608)