As filed with the Securities and Exchange Commission on April 30, 2003
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DARLING INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
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Delaware 2070 36-2495346
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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251 O'Connor Ridge Boulevard, Suite 300
Irving, Texas 75038
972.717.0300
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of Registrant's Principal Executive Offices)
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Joseph R. Weaver, Jr.
General Counsel and Secretary
Darling International Inc.
251 O'Connor Ridge Boulevard, Suite 300
Irving, Texas 75038
972.717.0300
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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With copies to:
Fredric J. Klink, Esq. Guy Young, Esq.
Dechert LLP Haynes and Boone, LLP
4675 MacArthur Court, Suite 1400 1000 Louisiana, Suite 4300
Newport Beach, California 92660 Houston, Texas 77002
949.442.6000 713.547.2000
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Approximate date of commencement of proposed sale to the public: At such time or times on and after this
Registration Statement becomes effective as the selling stockholders may determine.
If the only securities being registered on this Form are being offered pursuant to dividend or interest
reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, check the following box. [x]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, please check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ] __________________
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check
the following box and list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________________
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
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CALCULATION OF REGISTRATION FEE
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Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Unit Price Registration Fee
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Common Stock, par 46,205,086 shares $1.99(1) $91,958,121(1) $7,439.41(2)
value $0.01 per share
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(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the
Securities Act of 1933. Based on the average of the high and low prices of the common stock reported on
the American Stock Exchange on April 28, 2003.
(2) Concurrently with filing this Registration Statement, the Registrant is terminating any secondary offering
of its Common Stock under Registration Statement on Form S-1 (File No. 333-88944) initially filed on May
23, 2002 (the "Earlier Registration Statement"). 46,205,086 shares of Common Stock remain unsold under the
Earlier Registration Statement. Pursuant to Rule 457(p), the Registrant is applying the filing fee
associated with the unsold Common Stock ($3,613.89) against the total filing fee that would otherwise be
due in connection with this Registration Statement.
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The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act
of 1933 or until this Registration Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a) may determine.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting offers
to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus dated April 30, 2003
P R O S P E C T U S
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DARLING INTERNATIONAL INC.
46,205,086 Shares of Common Stock
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Investing in our common stock involves a high degree of risk which is
described in the "Risk Factors" section beginning on page 2 of this prospectus.
We urge you to carefully read the "Risk Factors" section before you make your
investment decision.
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We have prepared this prospectus to allow the selling stockholders we have
identified herein, including their transferees, pledgees, donees and their
successors, to offer for resale up to 46,205,086 shares of our common stock held
by them.
The shares of common stock offered by this prospectus could be sold in
several ways, including, in transactions on the American Stock Exchange, or
otherwise at prevailing market prices at the time of sale, or in privately
negotiated transactions at prices agreed upon by the parties or through any
other means described under the heading "Plan of Distribution" beginning on page
12. We cannot assure you that the selling stockholders will sell all or any
portion of the common stock offered under this prospectus. Our company is not
selling any shares of common stock in this offering and therefore we will not
receive any proceeds from any sale of securities offered by this prospectus. We
are registering the shares of common stock offered under this prospectus to
satisfy registration rights of the selling stockholders. We have agreed to pay
for all expenses in connection with the registration of the securities offered
by this prospectus.
Our common stock is quoted on the American Stock Exchange under the symbol
"DAR." On April 28, 2003, the closing sales price of our common stock on the
American Stock Exchange was $2.00 per share.
Our principal executive office is located at 251 O'Connor Ridge Boulevard,
Suite 300, Irving, Texas 75038 and our telephone number is 972.717.0300.
No underwriter or any other person has been engaged to facilitate the sale
of the securities in this offering.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is __________, 2002
TABLE OF CONTENTS
Page
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About this Prospectus.................................................ii
Special Note Regarding Forward-Looking Statements.....................ii
Prospectus Summary.....................................................1
Risk Factors...........................................................2
Use Of Proceeds........................................................7
Dividend Policy........................................................7
Our Business...........................................................7
Selling Stockholders..................................................11
Plan Of Distribution..................................................12
Legal Matters.........................................................13
Experts...............................................................13
Where You Can Find More Information...................................14
Incorporation By Reference............................................14
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ABOUT THIS PROSPECTUS
The terms "Darling," "our," "we" and "us" as used in this prospectus,
refer to Darling International Inc. and its wholly-owned subsidiaries, except
where it is clear that the term refers only to the parent company.
This prospectus incorporates important business and financial
information about us that is not included in or delivered with this document.
This information is available without charge upon written or oral request. See
"Incorporation by Reference" and "Where You Can Find More Information."
We urge you to rely only on the information contained or incorporated
by reference in this prospectus. We have not, and the selling stockholders have
not, authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, we urge you not
to rely on it. The selling stockholders are not making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. We urge
you to assume that the information appearing in this prospectus is accurate as
of the date on the front cover of this prospectus only. Our business, financial
condition, results of operations and prospects may have changed since that date.
We have not undertaken any action to permit a public offering of the
securities offered by this prospectus outside the United States or to permit the
possession or distribution of this prospectus outside the United States. Persons
outside the United States who come into possession of this prospectus must
inform themselves about and observe any restrictions relating to the offering of
the securities offered by this prospectus and the distribution of this
prospectus outside of the United States.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based
these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to risks,
uncertainties and assumptions that may cause our actual results, levels of
activity, performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements expressed or
implied by such forward-looking statements. Factors that could contribute to
these differences include, but are not limited to, those discussed in the "Risk
Factors" section beginning on page 2 of this prospectus, elsewhere in this
prospectus and in our other filings with the SEC that are incorporated by
reference herein.
The following factors are among those that could cause actual results
to differ materially from our expectations:
o our continued ability to obtain sources of supply for our
rendering operations;
o general economic conditions in the U.S., European and Asian
markets;
o prices in the competing commodity markets which are volatile and
are beyond our control; and
o competition from companies which may have substantially greater
resources than we have.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "would," "expect," "plan,"
"anticipate," "believe," "estimate," "continue," or the negative of such terms
or other similar expressions. All forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements included in this prospectus.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed or incorporated by reference in this prospectus
might not occur. We urge you not to unduly rely on forward-looking statements
contained or incorporated by reference in this prospectus.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this
prospectus. This summary is not complete and may not contain all of the
information that may be important to you. We urge you to read the entire
prospectus carefully, including the "Risk Factors" section, and the additional
documents incorporated by reference herein, before making an investment
decision.
Darling International Inc.
Founded by the Swift meat packing interests and the Darling family in
1882, we were incorporated in Delaware in 1962 under the name "Darling-Delaware
Company, Inc." On December 28, 1993, we changed our name from "Darling-Delaware
Company, Inc." to "Darling International Inc."
We are a recycler of food processing by-products. We collect and
recycle animal processing by-products and used cooking oil from food service
establishments. We process such raw materials at 24 facilities located
throughout the United States into finished products such as tallow, protein and
yellow grease. We sell these products nationally and internationally, primarily
to producers of various industrial and commercial oleo-chemicals, soaps, pet
foods and livestock feed, for use as ingredients in their products or for
further processing into basic chemical compounds. In addition, we provide grease
trap service to food service establishments under the service mark TORVAC.
Grease trap service includes the scheduled periodic removal of grease and solids
from the grease trap to ensure the trap functions as intended, keeping these
materials from entering the sewer system. Many cities and municipalities have
ordinances and/or regulations that require periodic grease trap service as part
of restaurant operations.
Our principal executive office is located at 251 O'Connor Ridge
Boulevard, Suite 300, Irving, Texas 75038 and our telephone number is
972.717.0300. We maintain a site on the World Wide Web at the address
http://www.darlingii.com. The information on our Web site is not a part of this
prospectus.
Preliminary Note
The shares of our common stock covered by this prospectus were issued
to our lenders as part of a reduction in the principal amount and restructuring
of our indebtedness (the "Recapitalization"). The Recapitalization was approved
by our stockholders at an annual meeting of stockholders held on May 10, 2002
and was made effective as of that date. For a summary description of the
Recapitalization, see "Our Business--The Recapitalization."
The Offering of Common Stock
Securities offered for resale by the selling Up to 46,205,086 shares of common stock, par value
stockholders.............................................. $0.01 per share, held by them.
Voting Rights............................................. Holders of common stock will have one vote per share.
Use of Proceeds........................................... The selling shareholders will receive all of the net
proceeds from the sale of the securities sold under
this prospectus. We will not receive any of the
proceeds from those sales.
Dividends................................................. We do not expect to pay dividends on our common stock
in the foreseeable future. We anticipate that all
future earnings, if any, generated from operations will
be retained to develop and expand our business.
American Stock Exchange symbol............................ DAR.
We urge you to refer to the section entitled "Risk Factors" for an explanation
of the risks of investing in our common stock.
RISK FACTORS
We urge you to consider carefully all of the information set forth in
this prospectus and incorporated by reference in this prospectus. Please refer
to "Where You Can Find More Information" and "Incorporation by Reference." We
urge you to particularly evaluate the following risks before deciding to
purchase our common stock. Various statements in this prospectus (including some
of the following risk factors) and incorporated by reference in this prospectus
constitute forward-looking statements. Please refer to the section entitled
"Special Note Regarding Forward-Looking Statements."
Fluctuations in market prices of finished products--our profitability and cash
flow may be reduced by decreases in the market price of our products.
Our finished products are commodities, the prices of which are quoted
on established commodity markets. Accordingly, our profitability will be
affected by fluctuations in the prevailing market prices of such finished
products. A significant decrease in the market price of our products would have
a material adverse effect on our profitability and cash flow.
Substantial leverage and debt service--we have substantial debt and have
significant interest payment requirements which could adversely affect our
ability to operate our business.
We have a significant amount of indebtedness. Our substantial
indebtedness could have important consequences to the holders of our common
stock including the risks that:
o we will be required to use a substantial portion of our cash flow
from operations to pay our indebtedness, thereby reducing the
availability of our cash flow to fund the implementation of our
business strategy, working capital, capital expenditures, product
development efforts and other general corporate purposes;
o our interest expense could increase if interest rates in general
increase because all of our debt will bear interest based on
market rates;
o our level of indebtedness will increase our vulnerability to
general adverse economic and industry conditions;
o our debt service obligations could limit our flexibility in
planning for, or reacting to, changes in our business;
o our level of indebtedness may place us at a competitive
disadvantage compared to our competitors that have less debt; and
o our failure to comply with the financial and other restrictive
covenants in the agreements governing our indebtedness, which,
among other things, may limit our ability to borrow additional
funds and could result in an event of default, could have a
material adverse effect on us.
As of March 25, 2003, we owed a contractual amount of $56.4 million in
senior secured term loans with a carrying amount of $67.7 million and had no
senior secured revolving loans under our senior credit agreement. As of such
date, three letters of credit in the face amounts of $0.8 million, $3.7 million
and $4.5 million, respectively were issued and outstanding under the senior
credit facility. We will be able to incur additional indebtedness in the future,
including $8.4 million of additional debt available under our revolving credit
facility. Additional indebtedness will increase the risks described above. All
borrowings under our senior credit agreement, are secured and senior to our
Series A Preferred Stock and common stock.
For risks associated with the restrictive covenants in our debt
instruments, see "--Restrictive covenants in our debt instruments."
History of net losses--we have a history of net losses and we may incur net
losses, which in the future, could adversely affect our ability to service our
indebtedness.
We have a history of net losses and have not been profitable in recent
years and may not be profitable in the future. For the years ended December 29,
2001, December 30, 2000 and January 1, 2000, our net losses were approximately
$11.8 millions, $19.2 million and $16.0 million, respectively. However,
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following the Recapitalization completed in May 2002, as described below under
"Our Business--The Recapitalization," we reported a net profit of $9.0 million
for the year-ended December 28, 2002. If, however, we incur net losses in the
future, our ability to pay principal and interest on our indebtedness could be
adversely affected.
In order to establish consistent profitability, we must continue to do
one or more of the following:
o maintain our collection fees at levels sufficient to recover an
adequate portion of collection costs;
o increase gross margins to the extent of inflation;
o maintain our distribution capability;
o maintain competitiveness in pricing;
o continue to manage our operating expenses; and
o limit any increases in our indebtedness.
There can be no assurance that we will achieve these objectives or
attain consistent profitability.
Limitation on net operating loss carryforwards--as a result of the
Recapitalization, our ability to apply federal income tax net operating loss
carryforwards will be limited.
As a result of the Recapitalization, our ability to use federal income
tax net operating loss carryforwards to offset future taxable income that may be
generated will be limited. In particular, we have undergone a change in
ownership under Section 382 of the Code as a result of the Recapitalization. By
virtue of such a change in ownership, an annual limitation (generally equal to
the pre-change value of our stock multiplied by the adjusted federal tax-exempt
rate, which is set monthly by the IRS based on prevailing interest rates and
equal to 5.01% for May 2002) will be applied to the use of those net operating
loss carryforwards against future taxable income.
Restrictive covenants in our debt instruments--restrictions imposed by our
senior credit agreement, and future debt agreements may, limit our ability to
make payments on our Series A Preferred Stock, finance future operations or
capital needs or engage in other business activities that may be in our
interest.
Our senior credit agreement will, and future debt agreements may,
restrict our ability to:
o incur additional indebtedness;
o issue additional capital stock or preferred stock;
o pay dividends and make other distributions;
o prepay subordinated debt;
o make restricted payments;
o create liens;
o merge, consolidate or acquire other businesses;
o sell and otherwise dispose of assets; and
o enter into transactions with affiliates.
These terms may impose restrictions on our ability to finance future
operations, implement our business strategy, fund our capital needs or engage in
other business activities that may be in our interest. In addition, our senior
credit agreement will, and future indebtedness may, require us to maintain
compliance with specified financial ratios. Although we are currently in
compliance with the financial ratios and do not plan on engaging in transactions
that may cause us to not be in compliance with the ratios, our ability to comply
with these ratios may be affected by events beyond our control, including the
risks described in the other risk factors.
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A breach of any of these restrictive covenants or our inability to
comply with the required financial ratios could result in a default under the
senior credit agreement. In the event of a default under the senior credit
agreement, the lenders under the senior credit agreement may elect to:
o declare all borrowings outstanding, together with accrued and
unpaid interest and other fees, to be immediately due and payable;
or
o require us to apply all of our available cash to repay these
borrowings.
The lenders will also have the right in these circumstances to
terminate any commitments they have to provide further financing, including
under the revolving credit facility.
If we are unable to repay these borrowings when due, the lenders under
the senior credit agreement also will have the right to proceed against the
collateral, which consists of substantially all of our assets. If the
indebtedness under the senior credit agreement were to be accelerated, it is
likely that our assets may be insufficient to repay this indebtedness in full
under those circumstances. Any future credit agreement or other agreement
relating to our indebtedness to which we may become a party may include the
covenants described above and other restrictive covenants.
Ranking of our common stock--upon any distribution to our creditors in a
bankruptcy, liquidation or reorganization or similar proceeding relating to our
company or our property, the holders of our debt will be entitled to be paid in
cash before any payment may be made with respect to our common stock.
Our obligations with respect to our Series A Preferred Stock are
subordinate and junior in right of payment to all our present and future
indebtedness, including indebtedness under our senior credit agreement, but will
rank senior to our common stock. In the event of our bankruptcy, liquidation or
reorganization, our assets will be available to pay obligations on the Series A
Preferred Stock and then the common stock only after all holders of our
indebtedness and all our other creditors have been paid. As a result, in the
event of our liquidation or bankruptcy it is likely that there will be no assets
available for distribution to our equity holders and thus no value to our
equity.
Dividends--our ability to pay any dividends on our common stock may be limited.
We have not declared or paid cash dividends on our common stock since
January 3, 1989. The payment of any dividends by us on our common stock in the
future will be at the discretion of our Board of Directors and will depend upon,
among other things, future earnings, operations, capital requirements, our
general financial condition, the general financial condition of our subsidiaries
and general business conditions.
Our ability to pay any cash or noncash dividends on our common stock is
subject to applicable provisions of state law and to the terms of our senior
credit agreement. The terms of our senior credit agreement prohibit us from
paying any cash dividends on our common stock so long as any indebtedness or
commitments remain outstanding under our senior credit agreement. Moreover,
under Delaware law, we are permitted to pay cash or accumulated dividends on our
capital stock, including our common stock, only out of surplus, or if there is
no surplus, out of our net profits for the fiscal year in which a dividend is
declared or for the immediately preceding fiscal year. Surplus is defined as the
excess of a company's total assets over the sum of its total liabilities plus
the par value of its outstanding capital stock. In order to pay dividends, we
must have surplus or net profits equal to the full amount of the dividends at
the time such dividend is declared. In determining our ability to pay dividends,
Delaware law permits our Board of Directors to revalue our assets and
liabilities from time to time to their fair market values in order to establish
the amount of surplus. We cannot predict what the value of our assets or the
amount of our liabilities will be in the future and, accordingly, we cannot
assure the holders of our common stock that we will be able to pay dividends on
our common stock.
Additional Issuance of Shares--we may issue additional common stock or preferred
stock, which could dilute your interests.
Our certificate of incorporation, as amended does not limit the
issuance of additional common stock or additional series of preferred stock
ranking junior to our Series A Preferred Stock. As of April 28, 2003 we have
available for issuance 37,711,832 authorized but unissued shares of common stock
and 900,000 authorized but unissued shares of preferred stock that may be issued
in additional series.
Volatility of Share Price--the market price of our common stock could be
volatile.
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The market price of our common stock has been subject to volatility
and, in the future, the market price of our common stock could fluctuate widely
in response to numerous factors, many of which are beyond our control. These
factors include, among other things, actual or anticipated variations in our
operating results, earnings releases by us, changes in financial estimates by
securities analysts, sales of substantial amounts of our common stock pursuant
to this offering, market conditions in the industry and the general state of the
securities markets, governmental legislation or regulation, currency and
exchange rate fluctuations, as well as general economic and market conditions,
such as recessions.
Key Personnel--Our success is dependent on our key personnel.
Our success depends to a significant extent upon a number of key
employees, including members of senior management. The loss of the services of
one or more of these key employees could have a material adverse effect on our
business and prospects. We believe that our future success will depend in part
on our ability to attract, motivate and retain skilled technical, managerial,
marketing and sales personnel. Competition for such personnel is intense and
there can be no assurance that we will be successful in attracting, motivating
and retaining key personnel. The failure to hire and retain such personnel could
materially adversely affect our business and results of operations.
Competition--the most competitive aspect of our business is the procurement of
raw materials.
Our management believes that the most competitive aspect of our
business is the procurement of raw materials rather than the sale of finished
products. During the last ten plus years, pronounced consolidation within the
meat packing industry has resulted in bigger and more efficient slaughtering
operations, the majority of which utilize "captive" processors. Simultaneously,
the number of small meat packers, which have historically been a dependable
source of supply for non-captive processors, such as us, has decreased
significantly. Although the total amount of slaughtering may be flat or only
moderately increasing, the availability, quantity and quality of raw materials
available to the independent processors from these sources have all decreased.
Major competitors include: Baker Commodities in the West; National By-Products
in the Midwest; and Griffin Industries in Texas and the Southeast. Each of these
businesses compete in both the Rendering and Restaurant Service segments. A
significant decrease in raw materials available could materially and adversely
affect our business and results of operations.
The rendering and restaurant services industry is highly fragmented and
very competitive. We compete with other rendering and restaurant services
businesses and alternative methods of disposal of animal processing by-products
and used restaurant cooking oil provided by trash haulers and waste management
companies, as well as the alternative of illegal disposal. We charge a
collection fee to offset a portion of the cost incurred in collecting raw
material. In recent years we have become highly dependent upon these collection
fees. To the extent suppliers of raw materials look to alternate methods of
disposal, whether as a result of our collection fees being deemed too expensive
or otherwise, our raw material supply will decrease and our collection fee
revenues will decrease, which could materially and adversely affect our business
and results of operations.
Government regulations and approvals--we may incur material costs and
liabilities in complying with government regulations.
We are subject to the rules and regulations of various federal, state
and local governmental agencies. Material rules and regulations and the
applicable agencies are:
o the Food and Drug Administration (FDA), which regulates food and
feed safety;
o the United States Department of Agriculture (USDA), which
regulates collection and production methods;
o the Environmental Protection Agency (EPA), which regulates air and
water discharge requirements, as well as local and state agencies
governing air and water discharge;
o state Departments of Agriculture, which regulate animal by-product
collection and transportation procedures and animal feed quality;
and
o the United States Department of Transportation (USDOT), as well as
local and state agencies, which regulate the operation of our
commercial vehicles.
-5-
Such rules and regulations may influence our operating results at one
or more facilities. There can be no assurance that we will not incur material
costs and liabilities in connection with such regulations.
Ownership of our company--our lenders have the ability to exercise significant
control over all major corporate transactions and may have interests that
conflict with the interests of the other holders of our common stock.
Our lenders, through their beneficial ownership of our common stock, in
the aggregate own 75% of our voting equity. If they act in concert, the lenders
have effective control of us by virtue of their ability to elect the majority of
our directors, to approve any action requiring the approval of our stockholders,
including amendments to our charter documents, and to effect fundamental
corporate transactions such as mergers and asset sales. The interests of the
lenders as stockholders may differ from the interests of the other holders of
our common stock, thus the lenders may take actions that may disadvantage our
other stockholders. However, we were advised at the time of the Recapitalization
in May 2002, that the lenders do not have and do not expect to have any
contracts, arrangements or understandings to vote as a group for the election of
directors or on any other issue or to hold or dispose of their common stock or
Series A Preferred Stock.
We are highly dependent on natural gas.
Our operations are highly dependent on the use of natural gas. A
material increase in natural gas prices over a sustained period of time could
materially adversely affect our business, financial condition and results of
operations.
Certain of our 24 operating facilities are highly dependent upon a few
suppliers.
Certain of our 24 operating facilities are highly dependent on one or a
few suppliers. Should any of these suppliers choose alternate methods of
disposal, cease their operations, have their operations interrupted by casualty,
or otherwise cease using our collection services, such operating facilities
would be materially and adversely affected.
In certain markets we are highly dependent upon the continued and uninterrupted
operation of a single operating facility.
In the majority of our markets, in the event of a casualty or
condemnation involving a facility located in such market, we would utilize a
nearby operating facility to continue to serve our customers in such market. In
certain markets, however, we do not have alternate operating facilities. In the
event of a casualty or condemnation, we would experience an interruption in our
ability to service our customers and to procure raw materials. This would
materially and adversely affect our business and results of operations in such
markets. In addition, after an operating facility affected by a casualty or
condemnation is restored, there could be no assurance that customers who in the
interim choose to use alternative disposal services would return to use our
services.
Bovine spongiform encephalopathy (BSE) or "mad cow disease."
Effective August, 1997, the FDA promulgated a rule prohibiting the use
of mammalian proteins, with some exceptions, in feeds for cattle, sheep and
other ruminant animals. The intent of this rule is to prevent the spread of BSE,
commonly referred to as "mad cow disease," should the disease ever occur in the
United States. Our management believes that we are in compliance with the
provisions of the rule.
The European fear of "mad cow disease" could adversely impact
acceptance of our finished products in Europe. To date, the "mad cow disease"
situation in Europe and new FDA restrictions, coupled with much lower prices for
competing commodities, has caused lower prices for some of our key products. If
"mad cow disease" were to spread to the United States, this could have a
material adverse affect on our business and results of operations.
Events such as those of September 11, 2001 and the war with Iraq may adversely
affect the U.S. and international economies, the markets for our common stock
and our operations.
Following the September 11, 2001 terrorist attacks, there has been
substantial volatility in the U.S., Canadian and international financial
markets. Continued military or other response by the United States or its
allies, future terrorist attacks or the anticipation of any such actions or
events, as well as the war with Iraq, may have adverse impacts on the U.S. and
world economies and may disrupt financial markets (including payment systems and
clearinghouses) for extended periods of time. These armed conflicts or attacks
-6-
may also directly impact our physical facilities or those of our suppliers or
customers and could have an impact on our domestic and international sales,
supply chain, production capability and ability to deliver our products to our
customers.
Political and economic instability in some regions of the world may
also result and could negatively impact our business and financial condition and
our expectations as described in forward-looking statements. The foregoing
events may adversely affect our financial condition and the trading price of our
common shares.
USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the
resale of the securities offered hereby. We will not receive any proceeds from
the resale of such securities.
DIVIDEND POLICY
We have not declared or paid any dividends on our common stock since
January 3, 1989. In addition, our current financing arrangements prohibit us
from paying cash dividends on our common stock in the foreseeable future. We
currently intend to retain future earnings, if any, for use in the operation of
our business, to reduce our indebtedness and to fund future growth. Any future
determination to pay cash dividends on our common stock will be at the
discretion of our Board of Directors and will be based upon our financial
condition, operating results, capital requirements, plans for expansion,
restrictions imposed by any financing arrangements and any other factors that
the Board of Directors feels are relevant.
OUR BUSINESS
Darling
Founded by the Swift meat packing interests and the Darling family in
1882, we were incorporated in Delaware in 1962 under the name "Darling-Delaware
Company, Inc." On December 28, 1993, we changed our name from "Darling-Delaware
Company, Inc." to "Darling International Inc."
We are a recycler of food processing by-products. We collect and
recycle animal processing by-products and used cooking oil from food service
establishments. We process such raw materials at 24 facilities located
throughout the United States into finished products such as tallow, protein and
yellow grease. We sell these products nationally and internationally, primarily
to producers of various industrial and commercial oleo-chemicals, soaps, pet
foods and livestock feed, for use as ingredients in their products or for
further processing into basic chemical compounds. In addition, we provide grease
trap service to food service establishments under the service mark TORVAC.
Grease trap service includes the scheduled periodic removal of grease and solids
from the grease trap to ensure the trap functions as intended, keeping these
materials from entering the sewer system. Many cities and municipalities have
ordinances and/or regulations that require periodic grease trap service as part
of restaurant operations.
Our operations are currently organized into two segments. These are:
o Rendering, the core business of turning inedible waste from meat
and poultry processors into high quality feed ingredients and fats
for other industrial applications; and
o Restaurant Services, a group focused on growing the grease
collection business while expanding the line of services, which
includes grease trap servicing, offered to restaurants and food
processors.
Processing Operations
We create finished products primarily through the drying, grinding,
separating and blending of our various raw materials. The process starts with
the collection of animal processing by-products (fat, bones, feathers and offal)
from meat packers, grocery stores, butcher shops, meat markets, poultry
processors and food service establishments, as well as used cooking oil from
food service establishments and grocery stores.
The animal processing by-products are ground and heated to extract
water and separate oils from animal tissue as well as to make the material
suitable as an ingredient for animal feed. Protein is separated from the cooked
material by pressing the material, then grinding and sifting it through screens.
The separated tallow is centrifuged and/or refined for purity. The primary
finished products derived from the processing of animal by-products are tallow
and protein. Other by-products include poultry meal, feather meal and blood
meal. Used cooking oil from food service establishments is processed under a
separate procedure that involves heat processing and settling, as well as
refining, resulting in derived yellow grease, feed-grade animal fat, or
oleo-chemical feedstocks.
-7-
Purchase and Collection of Raw Materials
We operate a fleet of approximately 700 trucks and tractor-trailers to
collect raw materials from more than 80,000 food service establishments, butcher
shops, grocery stores, and independent meat and poultry processors. The raw
materials collected are manufactured into the finished products we sell. We
replace or upgrade our vehicle fleet to maintain efficient operations.
Raw materials are collected in one of two manners. Certain large
suppliers, such as large meat processors and poultry processors are furnished
with bulk trailers in which the raw material is loaded. We transport these
trailers directly to a processing facility. We provide the remaining suppliers,
primarily grocery stores and butcher shops with containers in which to deposit
the raw material. The containers are picked up by or emptied into our trucks on
a periodic basis. The type and frequency of service is determined by individual
supplier requirements, the volume of raw material generated by the supplier,
supplier location, and weather, among other factors.
Used cooking oil from food service establishments is placed in various
sizes and types of containers which we supply. In some instances, these
containers are loaded directly onto the trucks, while in other instances the oil
is pumped through a vacuum hose into the truck. We also sell or lease a
container for collection service to food service establishments called
CleanStar(R), which is a self-contained collection system that is housed either
inside or outside the establishment, with the used cooking oil pumped directly
into collection vehicles via an outside valve. Approximately 10% of our
restaurant suppliers utilize the CleanStar(R) system. The frequency of all forms
of raw material collection is determined by the volume of oil generated by the
food service establishment.
The raw materials we collect are transported either directly to a
processing plant or to a transfer station, where materials from several
collection routes are loaded into trailers and transported to a processing
plant. Collections of animal processing by-products generally are made during
the day, and materials are delivered to plants for processing within 24 hours of
collection to eliminate spoilage. Collection of used cooking oil can be made at
any time of the day or night, depending on supplier preference; these materials
may be held for longer periods of time before processing. We charge a collection
fee to offset a portion of the cost incurred in collecting raw material.
During the past year, our largest single supplier accounted for
approximately 8.2% of the total raw material we processed, and the 10 largest
raw materials suppliers accounted for approximately 32.2% of the total raw
material we processed. For a discussion of our competition for raw materials,
see "--Competition."
Raw Materials Pricing
We have two primary pricing arrangements with our raw materials
suppliers. Approximately half of our annual volume of raw materials is acquired
on a "formula" basis. Under a formula arrangement, the charge or credit for raw
materials is tied to published finished product commodity prices after deducting
a fixed service charge. We acquire the remaining annual volume of raw material
under "non-formula" arrangements whereby suppliers either are paid a fixed
price, are not paid, or are charged for the expense of collection, depending on
various economic and competitive factors.
The credit received or amount charged for raw material under both
formula and non-formula arrangements is based on various factors, including the
type of raw materials, the expected value of the finished product to be
produced, the anticipated yields, the volume of material generated by the
supplier, and processing and transportation costs. Competition among processors
to procure raw materials also affects the price paid for raw materials. See
"--Competition."
Formula prices are generally adjusted on a weekly, monthly or quarterly
basis while non-formula prices or charges are adjusted as needed to respond to
changes in finished product prices.
Finished Products
The finished products that result from the processing of animal
by-products are oils (primarily tallow and yellow grease) and meat and bone meal
(protein). Oils are used as ingredients in the production of pet food, animal
feed and soaps. Oleo-chemical producers use these oils as feedstocks to produce
specialty ingredients used in paint, rubber, paper, concrete, plastics and a
variety of other consumer and industrial products. Meals are used primarily as
high protein additives in pet food and animal feed.
Predominantly all of our finished products are commodities which are
quoted on established commodity markets or are priced relative to such
-8-
commodities. While our finished products are generally sold at prices prevailing
at the time of sale, our ability to deliver large quantities of finished
products from multiple locations and to coordinate sales from a central location
enables us to occasionally receive a premium over the then-prevailing market
price.
Marketing, Sales and Distribution of Finished Products
We market our finished products worldwide. Marketing activities are
primarily conducted through our marketing department, which is headquartered in
Irving, Texas. We also maintain sales offices in Los Angeles, California, and
Newark, New Jersey for sales and distribution of selected products. This sales
force is in contact with several hundred customers daily and coordinates the
sale and assists in the distribution of most finished products produced at our
processing plants. We sell our finished products internationally through
commodities brokers and through our agents in various countries.
We sell to numerous foreign markets, including Asia, the Pacific Rim,
North Africa, Mexico and South America. We have no material foreign operations,
but export a portion of our products to customers in various foreign counties.
Total export sales were $134.5 and $138.1 million for the years ended December
28, 2002 and December 29, 2001, respectively. The level of export sales may vary
from year to year depending on the relative strength of domestic versus overseas
markets. We obtain payment protection for most of our foreign sales by requiring
payment before shipment or by requiring bank letters of credit or guarantees of
payment from U.S. government agencies. We ordinarily are paid for our products
in U.S. dollars and have not experienced any material currency translation
losses or any material foreign exchange control difficulties.
We have not experienced any material restrictions on the export of our
products, although certain countries, including India and certain Middle East
countries restrict the import of proteins and fats and oils made from porcine
and bovine material, and the European Community has restrictions on proteins and
fats and oils made from specified bovine materials. The Bovine Spongiform
Encephalopathy (BSE) or "mad cow disease" situation in Europe and new FDA
restrictions, coupled with much lower prices for competing commodities, has
caused lower prices for some of our key products.
Finished products produced by us are distributed primarily by truck and
rail from our plants shortly following production. While there are some
temporary inventory accumulations at various port locations for export
shipments, inventories rarely exceed three weeks' production and, therefore, we
use limited working capital to carry inventories and reduce our exposure to
fluctuations in commodity prices.
Competition
Our management believes that the most competitive aspect of the
business is the procurement of raw materials rather than the sale of finished
products. During the last ten years, pronounced consolidation within the meat
packing industry has resulted in bigger and more efficient slaughtering
operations, the majority of which utilize "captive" processors (rendering
operations integrated with the meat or poultry packing operation).
Simultaneously, the number of small meat packers, which have historically been a
dependable source of supply for non-captive processors, has decreased
significantly. Although the total amount of slaughtering may be flat or only
moderately increasing, the availability, quantity and quality of raw materials
available to the independent processors from these sources have all decreased.
These factors have been offset, in part, however, by increasing environmental
consciousness. The need for food service establishments to comply with
environmental regulations concerning the proper disposal of used restaurant
cooking oil is offering a growth area for this raw material source. Major
competitors for the collection of raw material include: Baker Commodities in the
West; National By-Products in the Midwest; and Griffin Industries in Texas and
the Southeast. Each of these businesses competes in both the Rendering and
Restaurant Service segments.
In marketing our finished products, we face competition from other
processors and from producers of other suitable commodities. Tallows and greases
are in certain instances substitutes for soybean oil and palm stearine, while
protein is a substitute for soybean meal. Consequently, the prices of tallow,
yellow grease, and protein correlate with these substitute commodities. The
markets for finished products are impacted mainly by the worldwide supply of
fats, oils, proteins and grains. Other factors that influence the prices that we
receive for our finished products include the quality of our finished products,
consumer health consciousness, worldwide credit conditions and U.S. government
foreign aid. From time to time, we enter into arrangements with our suppliers of
raw materials pursuant to which such suppliers buy back our finished products.
-9-
Seasonality
The amount of raw materials made available to us by our suppliers is
relatively stable on a weekly basis except for those weeks which include major
holidays, during which the availability of raw materials declines because major
meat and poultry processors are not operating. Weather is also a factor.
Extremely warm weather adversely affects our ability to make higher quality
products because the raw material deteriorates more rapidly than in cooler
weather, while extremely cold weather, in certain instances, can hinder the
collection of raw materials.
The Recapitalization
On May 13, 2002, we consummated a comprehensive recapitalization plan
designed to provide us with sufficient financing to implement our business plan
and improve our debt and capital structure. The principal components of the
Recapitalization consisted of:
o the issuance to the lenders of (a) 46,705,086 shares of common
stock, such that the lenders collectively own 75% our issued and
outstanding common stock and (b) 100,000 shares of 6% cumulative
redeemable Series A Preferred Stock with a liquidation preference
of $100 per share in exchange for the cancellation of an aggregate
of approximately $64.6 million of indebtedness owed by us,
comprised of (i) $55.4 million principal amount of loans under our
previous credit agreement, (ii) $5.3 million of accrued and unpaid
interest and commitment fees owing under our previous credit
agreement and (iii) the $3.9 million forbearance fee we owed to
the lenders under the forbearance agreement then existing;
o a new amended and restated credit agreement with the lenders that
provides for a $61.0 million term loan and a revolving credit
facility of $17.3 million for working capital loans and letters of
credit. The term loan and the revolving credit facility mature on
May 10, 2007;
o the reduction of our indebtedness to the lenders from
approximately $126.9 million to $61.0 million principal, as of the
date of the Recapitalization;
o the reduction in the size of our Board of Directors from six to
five members (which has subsequently been restored to six members)
and the nomination for election of the three designees of the
lenders and two existing directors to our Board of Directors until
our 2003 annual meeting of stockholders;
o our granting certain preemptive rights to the lenders; and
o our filing this registration statement with the Securities and
Exchange Commission and granting the lenders certain other
registration rights relating to the shares of common stock and
preferred stock issued to them.
-10-
SELLING STOCKHOLDERS
The common stock offered hereby are being registered to permit public
secondary trading of such securities, and each of the selling stockholders may
offer the securities for resale from time to time. See "Plan of Distribution."
The number of shares of common stock that may actually be sold by each selling
stockholder will be determined by such selling stockholder. Because each of the
selling stockholders may sell all, some or none of the shares of common stock
covered by this prospectus which each holds, and because the offering
contemplated by this prospectus is not being underwritten, no estimate can be
given as to the number of shares of common stock that will be held by the
selling stockholders upon termination of the offering. Shares of common stock
may be sold from time to time by the selling stockholders or by pledgees,
donees, transferees or other successors in interest. The selling stockholders
may also loan or pledge the shares registered hereunder to broker-dealers and/or
others and these persons may sell the shares so loaned or upon a default may
effect the sales of the pledged shares pursuant to this prospectus.
The following table sets forth information known to us as of April 30,
2003, with respect to the beneficial ownership of each Credit Lyonnais New York
Branch, PPM America Special Investments Fund, L.P., Daple, S.A., PPM America
Special Investments CBO II, L.P., Bank One N.A., Credit Agricole Indosuez, Wells
Fargo Bank (Texas) National Association, Ark CLO 2000-1, Limited, Cerberus
Partners, L.P., and Avenue Special Situations Fund II L.P. of our common stock
before and after completion of the sale of the securities to be sold by each
under this prospectus. The information is based upon the assumption that the
selling stockholder does not sell any securities shown in the table as
beneficially owned other than the securities to be sold under this prospectus
and that the selling stockholder sells all such securities offered under this
prospectus. We have determined beneficial ownership in accordance with the rules
of the SEC.
Except in connection with the Recapitalization and in their capacity as
our lenders under our previous and our new senior credit facility, none of the
selling stockholders has held any position or office, or has had any other
material relationship with us or any of our affiliates within the past three
years, other than as a result of the ownership of our securities.
Information concerning the selling stockholders may change from time to
time. This prospectus will be supplemented from time to time as appropriate to
update the information set forth below and to identify any additional selling
stockholders who may offer shares of common stock hereunder.
-------------------------------------------------------------------------------
Common Stock
-------------------------------------------------------------------------------
Name of Selling Stockholder Shares Shares
Owned Offered
-------------------------------------------------------------------------------
Credit Lyonnais New York Branch 4,359,141 4,359,141
-------------------------------------------------------------------------------
PPM America Special Investments Fund, L.P. 10,522,770 10,522,770
-------------------------------------------------------------------------------
Daple, S.A. 719,940 719,940
-------------------------------------------------------------------------------
PPM America Special 6,659,897 6,659,897
Investments CBO II, L.P.
-------------------------------------------------------------------------------
Bank One N.A. 6,434,923 6,434,923
-------------------------------------------------------------------------------
Credit Agricole Indosuez 2,075,782 2,075,782
-------------------------------------------------------------------------------
Wells Fargo Bank (Texas) National Association 363 363
-------------------------------------------------------------------------------
Ark CLO 2000-1, Limited 1,037,891 1,037,891
-------------------------------------------------------------------------------
Cerberus Partners, L.P. 8,355,849 8,355,849
-------------------------------------------------------------------------------
Avenue Special Situations Fund II L.P. 6,038,530 6,038,530
-------------------------------------------------------------------------------
We have agreed to bear certain expenses (other than broker discounts
and commissions, if any) in connection with the registration of the securities.
-11-
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the securities
offered hereby. We are registering for resale by the selling stockholders and
certain transferees a total of 46,205,086 shares of our common stock, all of
which are issued and outstanding.
The selling stockholders may pledge or grant a security interest in
some or all of the shares of common stock owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to this
prospectus. The selling stockholders also may transfer and donate the shares of
common stock in certain circumstances in which case the transferees, donees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
The common stock offered hereby may be sold from time to time by the
selling stockholders or, to the extent permitted, by pledgees, donees,
transferees or other successors in interest. All or a portion of the common
stock offered by the selling stockholders may be disposed of from time to time
in one or more transactions through any one or more of the following means:
o by the purchasers directly;
o in ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o through underwriters or dealers who may receive compensation in
the form of underwriting discounts, concessions, or commissions
from the selling stockholders or such successors in interest
and/or from the purchasers of the common stock for whom they may
act as agent;
o by the writing of options on the common stock;
o by the pledge of the common stock as security for any loan or
obligation, including pledges to brokers or dealers who may, from
time to time, themselves effect distributions of the common stock
or interests therein;
o through purchases by a broker or dealer as principal and resale by
such broker or dealer for its own account;
o through a block trade in which the broker or dealer so engaged
will attempt to sell the common stock as agent but may position
and resell a portion of the block as principal to facilitate the
transaction; and
o by an exchange distribution in accordance with the rules of such
exchange or transactions in the over the counter market.
Such sales may be made at prices and at terms then prevailing or at
prices related to the then current market price or at negotiated prices and
terms.
In addition, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the common stock in the course of hedging the
positions they assume. The selling shareholders may also engage in the short
sale of the common stock and may deliver the common stock to cover short
positions or otherwise settle short sale transactions.
In effecting sales by the selling stockholders, brokers or dealers
engaged by the selling stockholders may arrange for other brokers or dealers to
participate. Brokers or dealers participating in such transactions may receive
commissions or discounts from the selling stockholders (and, if they act as
agent for the purchaser of such securities, from such purchaser). In addition,
underwriters or agents may receive compensation in the form of discounts,
concessions or commissions, from the selling stockholders or from the purchasers
of the securities sold by the selling stockholders for whom they may act as
agents. Underwriters may sell shares of common stock to or through dealers, who
may receive compensation in the form of discounts, concessions or commissions
from the underwriters or commissions from the purchasers as the purchaser's
agents. The selling stockholders, underwriters, brokers, dealers, and agents
that participate in the sale of the securities covered by this prospectus may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with such sales. To the extent the selling stockholders may be deemed
to be underwriters, the selling stockholders may be subject to certain statutory
liabilities of the Securities Act, including, but not limited to, Sections 11,
-12-
12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. In
addition and without limiting the foregoing, the selling stockholders will be
subject to applicable provisions of the Exchange Act, and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of the shares of common
stock by the selling stockholders.
At the time a particular offer and sale of securities under this
prospectus is made, to the extent required under the Securities Act, we will
file a supplemental prospectus, disclosing:
o the name of any such broker-dealers;
o the number of shares of common stock involved;
o the price at which such shares of common stock are to be sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable;
o that such broker-dealers did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus, as supplemented; and
o other facts material to the transaction.
The Registration Rights Agreement that was entered into among us and
the selling stockholders in connection with the Recapitalization provides that
we will pay substantially all of the expenses incident to the registration,
offering and sale of the shares of common stock by the selling stockholders,
other than underwriting discounts and commissions. The Registration Rights
Agreement also provides that we will indemnify the selling stockholders against
certain liabilities, including liabilities under the Securities Act.
Any shares of common stock covered by this prospectus that qualify for
sale pursuant to Rule 144 of the Securities Act may be sold under that rule
rather than pursuant to this prospectus. We cannot be sure that any of the
selling stockholders will sell any or all of the shares of common stock offered
by them under this prospectus.
LEGAL MATTERS
The validity of our common stock offered hereby will be passed upon by
Dechert LLP, New York, New York. Fredric J. Klink, one of our directors, was a
partner in the law firm of Dechert LLP until December 31, 2001 when he became
"of counsel" at Dechert LLP. Mr. Klink beneficially owns 190,000 shares of our
common stock. We pay Dechert LLP fees for the performance of various legal
services.
EXPERTS
Our consolidated financial statements and schedule incorporated by
reference in this prospectus from our Annual Report on Form 10-K as of December
28, 2002 and December 29, 2001, and for each of the years in the three-year
period ended December 28, 2002, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein and upon the authority of said firm as experts
in accounting and auditing. The report of KPMG LLP dated March 10, 2003 refers
to a change in the method of accounting for derivative instruments and hedging
activities in 2001 and a change in the method of accounting for and reporting of
disposals of long-lived assets and discontinued operations in 2002.
-13-
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. In accordance with the Exchange Act, we file
periodic reports, proxy statements and information statements and other
information with the Securities and Exchange Commission.
We have filed with the Securities and Exchange Commission, Washington,
D.C. 20549, a registration statement on Form S-3 under the Securities Act with
respect to our common stock offered hereby. This prospectus does not contain all
of the information set forth in the registration statement and the exhibits and
schedules to the registration statement. For further information with respect to
our company and our common stock offered hereby, reference is made to the
registration statement and the exhibits and schedules filed as a part of the
registration statement. Statements contained in this prospectus concerning the
contents of any contract or any other document are not necessarily complete;
reference is made in each instance to the copy of such contract or any other
document filed as an exhibit to the registration statement. Each such statement
is qualified in all respects by such reference to such exhibit. The registration
statement, including exhibits and schedules thereto, as well as all other
reports, proxy statements, information statements and other information we file
with the Securities and Exchange Commission, may be inspected without charge at
the Securities and Exchange Commission's principal office in Washington, D.C.,
and copies of all or any part thereof may be obtained from the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, after payment of fees prescribed by the Securities and
Exchange Commission. The Securities and Exchange Commission also maintains a Web
site which provides online access to reports, proxy and information statements
and other information regarding registrants that file electronically with the
Securities and Exchange Commission at the address http://www.sec.gov.
We will furnish without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of any and all of
these filings (except exhibits, unless they are specifically incorporated by
reference into this prospectus). Please direct any requests for copies to:
Darling International Inc.
251 O'Connor Ridge Boulevard, Suite 300
Irving, TX 75038
Attention: Joseph R. Weaver, Jr.
Telephone: 917.717.0300
Fax: 917.281.4475
E-mail: corporatesecretary@darlingii.com
INCORPORATION BY REFERENCE
The SEC allows us to incorporate by reference the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. We incorporate by reference in this prospectus
the information contained in the following documents:
o our annual report on Form 10-K for the year ended December 28,
2002 filed on March 26, 2003;
o our definitive proxy statement filed on April 17, 2003; and
o the description of our common stock contained in our registration
statement on Form 8-A (Registration No. 0-246201) filed on
September 4, 1997, as amended, and including any amendment or
report filed for the purpose of updating such description.
We are also incorporating by reference all other reports that we have
filed since December 28, 2002 or will file with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act until all the securities that may
be offered under this prospectus are sold.
You may obtain copies of these documents from us, free of cost, by
contacting us at the address or telephone number provided in "Where You Can Find
More Information" immediately above.
Information that we file later with the SEC and that is incorporated by
reference in this prospectus will automatically update and supersede information
contained in this prospectus. You will be deemed to have notice of all
information incorporated by reference in this prospectus as if that information
was included in this prospectus.
-14-
DARLING INTERNATIONAL INC.
46,205,086 shares of Common Stock
------------------
P R O S P E C T U S
------------------
____________, 2003
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses to be paid by our company in connection with the
distribution of the securities being registered are as follows:
------------------------
Amount (1)
Securities and Exchange Commission Registration Fee.................. $ 7,439
American Stock Exchange Listing Fee.................................. 22,500
Accounting Fees and Expenses......................................... 15,000
Legal Fees and Expenses.............................................. 15,000
Transfer Agent and Registrar Fees and Expenses....................... 0
Printing and Engraving Expenses...................................... 3,000
Miscellaneous Fees and Expenses...................................... 500
------------------------
Total..................................................... $ 63,439
========================
------------------------
(1) All amounts are estimates except the SEC filing fee and the American
Stock Exchange listing fee.
Item 15. Indemnification of Directors and Officers
As permitted under Section 102(b)(7) of the Delaware General
Corporation Law, our restated certificate of incorporation, as amended, provides
that our directors (including any advisory director) shall not be liable to us
or our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to us or to our stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, relating to
prohibited dividends or distributions or the repurchase or redemption of stock,
or (iv) for any transaction from which the director derives an improper personal
benefit.
In addition, as permitted by Section 145 of the Delaware General
Corporation Law our restated certificate of incorporation, as amended and our
amended and restated bylaws, as amended provide that we shall indemnify any
person, including officers and directors, who was or is, or is threatened to be
made, a party to any threatened, pending or completed action, suit or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of our company), by reason of the fact that
such person is or was a director, officer, employee or agent of our company or
is or was serving at the request of our company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to our best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was unlawful.
Furthermore, as permitted by Section 145, expenses (including attorneys
fees) incurred by an officer or director defending or settling any civil,
criminal, administrative or investigative action, suit or proceeding shall be
paid by us in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by us. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as our board of directors deems appropriate.
And as provided in Section 145, the indemnification and advancement of
expenses provided by, or granted pursuant to, the above-described provisions
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding such office.
II-1
We have obtained a policy of directors' and officers' liability
insurance that insures our directors and officers against the cost of defense,
settlement or payment of a judgment under certain circumstances.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
Item 16. Exhibits
Exhibit No. Document
----------- --------
3.1 Restated Certificate of Incorporation of the Company, as
amended (filed as Exhibit 3.1 to the Company's Registration
Statement on Form S-1 filed May 23, 2002 and incorporated
herein by reference).
3.2 Amended and Restated Bylaws of the Company, as amended
(filed as Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q filed August 12, 1997 and incorporated herein by
reference).
4.1 Specimen Common Stock Certificate (filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-1 filed May
27, 1994 and incorporated herein by reference).
4.2 Certificate of Designation, Preference and Rights of Series
A Preferred Stock (filed as Exhibit 4.2 to the Company's
Registration Statement on Form S-1 filed May 23, 2002 and
incorporated herein by reference).
5.1 Opinion of Dechert as to the legality of the shares of
common stock being registered (filed herewith).
10.1 Recapitalization Agreement, dated as of March 15, 2002,
among Darling International Inc., each of the banks or
other lending institutions which is a signatory thereto or
any successor or assignee thereof, and Credit Lyonnais New
York Branch, individually as a bank and as agent (filed as
Annex C to the Company's Definitive Proxy Statement filed
on April 29, 2002 and incorporated herein by reference).
10.2 First Amendment to Recapitalization Agreement, dated as of
April 1, 2002, among Darling International Inc., each of
the banks party to the Recapitalization Agreement, and
Credit Lyonnais New York Branch, individually as a bank and
as agent (filed as Annex D to the Company's Definitive
Proxy Statement filed on April 29, 2002 and incorporated
herein by reference).
10.3 Second Amendment to Recapitalization Agreement, dated as of
April 29, 2002, among Darling International Inc., each of
the banks party to the Recapitalization Agreement, and
Credit Lyonnais New York Branch, individually as a bank and
as agent (filed as Exhibit 10.3 to the Company's
Registration Statement on Form S-1 filed on May 23, 2002,
and incorporated herein by reference).
10.4 Amended and Restated Credit Agreement, dated as of May 10,
2002, among Darling International Inc., Credit Lyonnais New
York Branch, individually as a bank and as agent, and the
other banks and secured parties named therein (filed as
Exhibit 10.4 to the Company's Registration Statement on
Form S-1 filed on May 23, 2002, and incorporated herein by
reference).
II-2
10.5 Registration Rights Agreement, dated as of December 29,
1993, between Darling International Inc. and the signatory
holders identified therein (filed as Exhibit 10.3 to the
Company's Registration Statement on Form S-1 filed May 27,
1994 and incorporated herein by reference).
10.6 Registration Rights Agreement, dated as of May 10, 2002,
between Darling International Inc. and the holders
identified therein (filed as Exhibit 10.6 to the Company's
Registration Statement on Form S-1 filed on May 23, 2002,
and incorporated herein by reference).
10.7 Form of Indemnification Agreement (filed as Exhibit 10.7 to
the Company's Registration Statement on Form S-1 filed May
27, 1994 and incorporated herein by reference).
10.8 Form of Executive Severance Agreement (filed as Exhibit
10.6 to the Company's Registration Statement on Form S-1
filed May 27, 1994 and incorporated herein by reference).
10.9 Lease, dated November 30, 1993, between the Company and the
Port of Tacoma (filed as Exhibit 10.8 to the Company's
Registration Statement on Form S-1 filed May 27, 1994 and
incorporated herein by reference).
10.10 Leases, dated July 1, 1996, between the Company and the
City and County of San Francisco (filed pursuant to
temporary hardship exemption under cover of Form SE).
10.11 1993 Flexible Stock Option Plan (filed as Exhibit 10.2 to
the Company's Registration Statement on Form S-1 filed May
27, 1994 and incorporated herein by reference).
10.12 1994 Employee Flexible Stock Option Plan (filed as Exhibit
2 to the Company's Revised Definitive Proxy Statement filed
on April 20, 2001 and incorporated herein by reference).
10.13 Non-Employee Directors Stock Option Plan (filed as Exhibit
10.13 to the Company's Registration Statement on Form S-1/A
filed on June 5, 2002, and incorporated herein by
reference).
10.14 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Credit Lyonnais and Darling
International Inc. dated as of June 6, 1997, related to
interest rate swap transaction (filed as Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q filed August
12, 1997 and incorporated herein by reference).
10.15 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Wells Fargo Bank, N.A. and
Darling International Inc. dated as of June 6, 1997,
related to interest rate swap transaction (filed as Exhibit
10.3 to the Company's Quarterly Report on Form 10-Q filed
August 12, 1997 and incorporated herein by reference).
10.16 Confirmation dated September 20, 1999 which supplements,
forms part of, and is subject to, the ISDA Master Agreement
dated as of June 6, 1997 between Credit Lyonnais and
Darling International Inc (filed as Exhibit 10.17B to the
Company's Annual Report on Form 10-K filed March 31, 2000
and incorporated herein by reference).
10.17 Master Lease Agreement between Navistar Leasing Company and
Darling International Inc. dated as of August 4, 1999
(filed as Exhibit 10.18 to the Company's Annual Report on
Form 10-K filed March 31, 2000 and incorporated herein by
reference).
10.18 Consulting Agreement, dated as of May 10, 2002, by and
between Darling International Inc., Taura Flynn and
Associates LLC, and Denis J. Taura (filed as Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q filed August
13, 2002 and incorporated herein by reference).
10.19 Employment Agreement, dated as of February 3, 2003, between
Darling International Inc. and Randall C. Stuewe (filed as
Exhibit 10.1 to the Company's Current Report on Form 8-K
filed February 3, 2003, and incorporated herein by
reference).
II-3
21.1 Subsidiaries of the Registrant (filed as Exhibit 21.1 to
the Company's Registration Statement on Form S-1 filed on
May 23, 2002, and incorporated herein by reference).
23.1 Consent of Dechert (included in Exhibit 5.1).
23.2 Consent of KPMG (filed herewith).
24.1 Power of Attorney (included on the signature page of this
registration statement and incorporated herein by
reference).
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the registration statement
is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed with or
furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-4
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than a payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion if its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Irving, Texas, on the 30th day of April, 2003.
DARLING INTERNATIONAL INC.
By: /s/ John O. Muse
-------------------------------
John O. Muse
Executive Vice President -
Finance and Administration
SIGNATURES AND POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Randall C. Stuewe and John O. Muse, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and sign any
registration statement (or amendment thereto) for the same offering covered by
the Registration Statement that is to be effective upon filing pursuant to Rule
462 promulgated under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Randall C. Stuewe
------------------------- Chairman of the Board and April 30, 2003
Randall C. Stuewe Chief Executive Officer
/s/ James A. Ransweiler
------------------------- President and Chief Operating April 30, 2003
James A. Ransweiler Officer (Principal Executive
Officer)
/s/ John O. Muse
------------------------- Executive Vice President - April 30, 2003
John O. Muse Finance and Administration
(Principal Financing and
Accounting Officer)
/s/ O. Thomas Albrecht
------------------------- Director April 30, 2003
O. Thomas Albrecht
/s/ Fredric J. Klink
------------------------- Director April 30, 2003
Fredric J. Klink
/s/ Charles Macaluso
------------------------- Director April 30, 2003
Charles Macaluso
/s/ Richard A. Peterson
------------------------- Director April 30, 2003
Richard A. Peterson
/s/ Denis J. Taura
------------------------- Director April 30, 2003
Denis J. Taura
II-6
EXHIBIT INDEX
Exhibit No. Document
----------- --------
3.1 Restated Certificate of Incorporation of the Company, as
amended (filed as Exhibit 3.1 to the Company's Registration
Statement on Form S-1 filed May 23, 2002 and incorporated
herein by reference).
3.2 Amended and Restated Bylaws of the Company, as amended
(filed as Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q filed August 12, 1997 and incorporated herein by
reference).
4.1 Specimen Common Stock Certificate (filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-1 filed May
27, 1994 and incorporated herein by reference).
4.2 Certificate of Designation, Preference and Rights of Series
A Preferred Stock (filed as Exhibit 4.2 to the Company's
Registration Statement on Form S-1 filed May 23, 2002 and
incorporated herein by reference).
5.1 Opinion of Dechert as to the legality of the shares of
common stock being registered (filed herewith).
10.1 Recapitalization Agreement, dated as of March 15, 2002,
among Darling International Inc., each of the banks or
other lending institutions which is a signatory thereto or
any successor or assignee thereof, and Credit Lyonnais New
York Branch, individually as a bank and as agent (filed as
Annex C to the Company's Definitive Proxy Statement filed
on April 29, 2002 and incorporated herein by reference).
10.2 First Amendment to Recapitalization Agreement, dated as of
April 1, 2002, among Darling International Inc., each of
the banks party to the Recapitalization Agreement, and
Credit Lyonnais New York Branch, individually as a bank and
as agent (filed as Annex D to the Company's Definitive
Proxy Statement filed on April 29, 2002 and incorporated
herein by reference).
10.3 Second Amendment to Recapitalization Agreement, dated as of
April 29, 2002, among Darling International Inc., each of
the banks party to the Recapitalization Agreement, and
Credit Lyonnais New York Branch, individually as a bank and
as agent (filed as Exhibit 10.3 to the Company's
Registration Statement on Form S-1 filed on May 23, 2002,
and incorporated herein by reference).
10.4 Amended and Restated Credit Agreement, dated as of May 10,
2002, among Darling International Inc., Credit Lyonnais New
York Branch, individually as a bank and as agent, and the
other banks and secured parties named therein (filed as
Exhibit 10.4 to the Company's Registration Statement on
Form S-1 filed on May 23, 2002, and incorporated herein by
reference).
10.5 Registration Rights Agreement, dated as of December 29,
1993, between Darling International Inc. and the signatory
holders identified therein (filed as Exhibit 10.3 to the
Company's Registration Statement on Form S-1 filed May 27,
1994 and incorporated herein by reference).
10.6 Registration Rights Agreement, dated as of May 10, 2002,
between Darling International Inc. and the holders
identified therein (filed as Exhibit 10.6 to the Company's
Registration Statement on Form S-1 filed on May 23, 2002,
and incorporated herein by reference).
10.7 Form of Indemnification Agreement (filed as Exhibit 10.7 to
the Company's Registration Statement on Form S-1 filed May
27, 1994 and incorporated herein by reference).
10.8 Form of Executive Severance Agreement (filed as Exhibit
10.6 to the Company's Registration Statement on Form S-1
filed May 27, 1994 and incorporated herein by reference).
10.9 Lease, dated November 30, 1993, between the Company and the
Port of Tacoma (filed as Exhibit 10.8 to the Company's
Registration Statement on Form S-1 filed May 27, 1994 and
incorporated herein by reference).
10.10 Leases, dated July 1, 1996, between the Company and the
City and County of San Francisco (filed pursuant to
temporary hardship exemption under cover of Form SE).
10.11 1993 Flexible Stock Option Plan (filed as Exhibit 10.2 to
the Company's Registration Statement on Form S-1 filed May
27, 1994 and incorporated herein by reference).
10.12 1994 Employee Flexible Stock Option Plan (filed as Exhibit
2 to the Company's Revised Definitive Proxy Statement filed
on April 20, 2001 and incorporated herein by reference).
10.13 Non-Employee Directors Stock Option Plan (filed as Exhibit
10.13 to the Company's Registration Statement on Form S-1/A
filed on June 5, 2002, and incorporated herein by
reference).
10.14 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Credit Lyonnais and Darling
International Inc. dated as of June 6, 1997, related to
interest rate swap transaction (filed as Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q filed August
12, 1997 and incorporated herein by reference).
10.15 International Swap Dealers Association, Inc. (ISDA) Master
Agreement and Schedule between Wells Fargo Bank, N.A. and
Darling International Inc. dated as of June 6, 1997,
related to interest rate swap transaction (filed as Exhibit
10.3 to the Company's Quarterly Report on Form 10-Q filed
August 12, 1997 and incorporated herein by reference).
10.16 Confirmation dated September 20, 1999 which supplements,
forms part of, and is subject to, the ISDA Master Agreement
dated as of June 6, 1997 between Credit Lyonnais and
Darling International Inc (filed as Exhibit 10.17B to the
Company's Annual Report on Form 10-K filed March 31, 2000
and incorporated herein by reference).
10.17 Master Lease Agreement between Navistar Leasing Company and
Darling International Inc. dated as of August 4, 1999
(filed as Exhibit 10.18 to the Company's Annual Report on
Form 10-K filed March 31, 2000 and incorporated herein by
reference).
10.18 Consulting Agreement, dated as of May 10, 2002, by and
between Darling International Inc., Taura Flynn and
Associates LLC, and Denis J. Taura (filed as Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q filed August
13, 2002 and incorporated herein by reference).
10.19 Employment Agreement, dated as of February 3, 2003, between
Darling International Inc. and Randall C. Stuewe (filed as
Exhibit 10.1 to the Company's Current Report on Form 8-K
filed February 3, 2003, and incorporated herein by
reference).
21.1 Subsidiaries of the Registrant (filed as Exhibit 21.1 to
the Company's Registration Statement on Form S-1 filed on
May 23, 2002, and incorporated herein by reference).
23.1 Consent of Dechert (included in Exhibit 5.1).
23.2 Consent of KPMG (filed herewith).
24.1 Power of Attorney (included on the signature page of this
registration statement and incorporated herein by
reference).