As filed with the Securities and Exchange Commission on May 30, 2003

                                                                                                Registration No. 333-88944
===========================================================================================================================
                                             SECURITIES AND EXCHANGE COMMISSION
                                                    Washington, DC 20549


                                                       AMENDMENT NO. 3
                                                      (Post-Effective)
                                                             TO
                                                          FORM S-1
                                                   REGISTRATION STATEMENT
                                                            UNDER
                                                 THE SECURITIES ACT OF 1933

                                                       --------------
                                                 DARLING INTERNATIONAL INC.
                                   (Exact name of Registrant as specified in its charter)

                           Delaware                                 2070                               36-2495346
                (State or Other Jurisdiction           (Primary Standard Industrial                (I.R.S. Employer
             of Incorporation or Organization)         Classification Code Number)               Identification No.)

                                                       --------------
                                           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)

                                                       --------------
                                                    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)

                                                       --------------
                                                       With copies to:

                                                   Fredric J. Klink, Esq.
                                                         Dechert LLP
                                                    30 Rockefeller Plaza
                                                  New York, New York 10112
                                                        212.698.3537

                                                       --------------

         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 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 this form is a  post-effective  amendment  filed  pursuant to Rule 462(d) 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. [ ]


         Note: This Registration Statement as initially filed on May 23, 2002 covered the resale of 46,705,086 shares of the
Registrant's  Common Stock and the resale of 100,000 shares of the Company's  Series A Preferred  Stock.  Concurrently  with
filing  Amendment No. 2 on April 30, 2003, the Registrant  terminated any secondary  offering of its Common Stock under this
Registration  Statement and  separately  filed a  Registration  Statement on Form S-3 covering the resale of the  46,205,086
shares of Common Stock that remained unsold under this Registration Statement.


                                                       --------------
         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 May 30, 2003




P R O S P E C T U S
-------------------

                           DARLING INTERNATIONAL INC.

                   100,000 Shares of Series A Preferred Stock

                                 --------------

         Investing  in our Series A  Preferred  Stock  involves a high degree of
risk which is described in the "Risk Factors"  section  beginning on  page 8  of
this prospectus. We urge you to carefully read the "Risk Factors" section before
you make your investment decision.


                                 --------------
         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 100,000  shares of our Series A Preferred
Stock held by them.


         The  securities  offered  by this  prospectus  could be sold in several
ways,  including,  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 63.  We cannot assure you that the selling  stockholders  will
sell all or any  portion  of the Series A  Preferred  Stock  offered  under this
prospectus. Our company is not selling any shares of Series A Preferred 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 Series A
Preferred 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.


         There is no public market for the Series A Preferred  Stock,  and we do
not  intend  to  apply  for  listing  of the  Series  A  Preferred  Stock on any
securities exchange or for quotation through any automated quotation system.

         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.


                                 --------------
                 The date of this prospectus is __________, 2002








                                                  TABLE OF CONTENTS


                                                                                                               Page
                                                                                                            

Forward-Looking Statements........................................................................................1
Prospectus Summary................................................................................................1
Summary Historical Consolidated Financial Data....................................................................4
Risk Factors......................................................................................................8
Recapitalization.................................................................................................15
Use Of Proceeds..................................................................................................16
Market For Common Equity And Related Stockholder Matters.........................................................16
Dividend Policy..................................................................................................16
Capitalization...................................................................................................17
Selected Historical Consolidated Financial Data..................................................................18
Management's Discussion And Analysis Of Financial Condition And Results Of Operations............................21
Our Business.....................................................................................................31
Our Management...................................................................................................38
Report Of The Compensation Committee.............................................................................48
Compliance With Section 16(a) Of The Exchange Act................................................................50
Certain Relationships and Related Transactions...................................................................50
Performance Graph................................................................................................50
Security Ownership Of Certain Beneficial Owners And Management...................................................52
Description Of Senior Credit Agreement...........................................................................56
Description Of Capital Stock.....................................................................................57
Selling Stockholders.............................................................................................61
Plan Of Distribution.............................................................................................63
Material U.S. Federal Tax Considerations.........................................................................65
Legal Matters....................................................................................................71
Experts..........................................................................................................71
Where You Can Find More Information..............................................................................71
Index To Consolidated Financial Statements......................................................................F-1




                                      - i -





                           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 are discussed in the "Risk Factors" section beginning on page
7 of  this  prospectus,  and  elsewhere  in  this  prospectus  as well as in our
previous filings with the SEC.


         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 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.

                                 --------------

         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.

         We  urge  you  to  rely  only  on the  information  contained  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.

                               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 financial
statements and related notes, 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 Series A Preferred  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 "Recapitalization."

                    The Offering of Series A Preferred Stock



                                                          
Securities offered for resale by the
selling stockholders....................................     Up to 100,000 shares of Series A Preferred Stock, par
                                                             value $0.01 per share, held by them.

Voting Rights...........................................     Holders of the Series A Preferred Stock will have no
                                                             voting rights as to general corporate matters except as
                                                             provided by Delaware law or, in limited circumstances,
                                                             as provided in the certificate of designation relating
                                                             to the Series A Preferred Stock.  See "Description of
                                                             Capital Stock-- Preferred Stock-- Series A Preferred
                                                             Stock-- Voting Rights."

Use of Proceeds.........................................     The selling stockholders 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 will pay dividends on the Series A Preferred Stock
                                                             out of funds legally available for the payment of
                                                             dividends at an annual fixed rate of 6% on the original
                                                             issue price of $100 per share.  Dividends on the Series
                                                             A Preferred Stock will be cumulative from the issue
                                                             date, whether or not declared, and are to be either
                                                             paid in cash semi-annually or, at our election may be
                                                             accumulated, in which case the dividends will be added
                                                             to the original issue price, and dividends will
                                                             thereafter accrue on the original issue price as so
                                                             adjusted.  However, our amended and restated senior
                                                             credit agreement prohibits us from paying any cash
                                                             dividends while any indebtedness remains outstanding
                                                             under such agreement.  See "Description of Senior
                                                             Credit Agreement."

Liquidation Preference..................................     $100 per share liquidation preference, plus all
                                                             accumulated dividends and accrued and unpaid dividends
                                                             not yet accumulated.


                                       -2-





Mandatory Redemption; Change of Control.................     We must redeem all shares of the Series A Preferred
                                                             Stock outstanding upon the earliest to occur of:

                                                                      o    a change of control of our company,

                                                                      o    a sale of all or substantially all of our
                                                                           consolidated assets,

                                                                      o    a dissolution or liquidation of our
                                                                           company, and

                                                                      o    May 10, 2007,

                                                             to the extent we have legally available funds, at
                                                             a redemption price equal to the aggregate original
                                                             issue price of the shares to be redeemed, plus accumulated
                                                             dividends and accrued and unpaid dividends not yet
                                                             accumulated to the date of redemption.

Optional Redemption.....................................     Subject to the prior payment in full of all
                                                             indebtedness outstanding under our senior credit
                                                             agreement, we may redeem shares of Series A Preferred
                                                             Stock in multiples of not less than $1 million at any
                                                             time, upon 30 days notice, at a redemption price equal
                                                             to the sum of the original issue price of the shares to
                                                             be redeemed, plus accumulated dividends and accrued and
                                                             unpaid dividends not yet accumulated to the date of
                                                             redemption.  If less than all shares of Series A
                                                             Preferred Stock are to be redeemed, they are required
                                                             to be redeemed pro-rata based on the number of shares
                                                             of Series A Preferred Stock owned.

Ranking.................................................     With respect to dividends and liquidation preference,
                                                             the Series A Preferred Stock will rank senior to our
                                                             common stock and senior to other future series of our
                                                             preferred stock.  We may issue additional series of
                                                             preferred stock that rank junior to the Series A
                                                             Preferred Stock without a vote of the holders of the
                                                             Series A Preferred Stock.  We may only create series or
                                                             classes of preferred stock that rank senior to or on a
                                                             parity with the Series A Preferred Stock if the
                                                             creation of those senior shares is approved by the
                                                             holders of 66 2/3% of the then outstanding shares of
                                                             the Series A Preferred Stock.

Listing.................................................     The Series A Preferred Stock is not listed for trading
                                                             on any securities exchange or market, and we do not
                                                             currently intend to, nor are we required to, list the
                                                             shares of Series A Preferred Stock on any securities
                                                             exchange or market.


We urge you to refer to the section entitled "Risk Factors" for an explanation of the risks of investing in our Series A
Preferred Stock.



                                                         -3-





                 SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA

         The following summary historical  consolidated financial data should be
read in  conjunction  with  "Management's  Discussion  and Analysis of Financial
Condition  and Results of  Operations"  and our audited  consolidated  financial
statements  and related  notes  thereto  and  unaudited  consolidated  financial
statements and related notes thereto included elsewhere in this prospectus.



                                                                        Fiscal Year Ended (a)

                                              -------------------------------------------------------------------------
                                               December 28,  December 29,   December 30,    January 1,     January 2,
                                                 2002(b)        2001(b)        2000(b)        1999(b)        1999 (b)
--------------------------------------------- -------------- -------------- -------------- -------------- -------------
                                                           (in thousands, except ratio and per share data)

                                                                                           
Operating Data:
     Net sales                                 $ 262,236       $242,964       $229,273       $244,036       $318,706
                                               ---------      ---------      ---------      ---------      ---------
     Cost of sales and operating expenses        194,559        185,019        177,638        198,646        267,190
     Selling, general and administrative
       expenses                                   30,294         28,334         26,479         26,451         32,347
     Depreciation and amortization                16,426         24,898         26,859         30,734         30,284
                                               ---------      ---------      ---------      ---------      ---------

     Operating income (loss)                      20,957          4,713         (1,703)       (11,795)       (11,115)
     Interest expense                              6,409         14,162         13,971         15,533         12,747
     Other (income) expense, net                  (2,001)         1,656            187         (1,805)         1,073
                                               ---------      ---------      ---------      ---------      ---------
     Income (loss) from continuing
       operations before income taxes             16,549        (11,105)       (15,861)       (25,523)       (24,935)
     Income tax expense (benefit)                  7,183              -              -         (9,942)        (8,887)
                                               ---------      ---------      ---------      ---------      ---------
     Income (loss) from continuing
       operations                                  9,366        (11,105)       (15,861)       (15,581)       (16,048)
     Loss from discontinued operations,
       net of tax                                   (403)          (740)        (3,328)          (452)       (16,045)
                                               ---------      ---------      ---------      ---------      ---------
     Net Income  (loss)                           $8,963       $(11,845)      $(19,189)      $(16,033)      $(32,093)
                                               =========      =========      =========      =========      =========

     Basic earnings (loss) per common share        $0.18         $(0.76)        $(1.23)        $(1.03)        $(2.06)
     Diluted earnings (loss) per common
       share                                       $0.18         $(0.76)        $(1.23)        $(1.03)        $(2.06)
     Weighted average shares outstanding          45,003         15,568         15,568         15,560         15,581
     Diluted weighted average shares
       outstanding                                45,577         15,568         15,568         15,560         15,581
Other Data:
     EBITDA  (c)                                 $37,383        $29,611        $25,156        $18,939        $19,169
     Depreciation                                 12,146         19,642         21,219         24,820         24,298
     Amortization                                  4,280          5,256          5,640          5,914          5,986
     Capital expenditures                         13,433          8,847          7,287          9,446         14,345
Ratio of Earnings to Fixed Charges (d)              2.55           0.29              -              -              -
Balance Sheet Data:
     Working capital (deficiency)                 $9,152      $(116,718)     $(106,809)       $(5,223)        $3,070
     Total assets                                162,912        159,079        174,505        197,804        263,166
     Current portion of long-term debt             8,372        120,053        109,528          7,810          7,717
     Total long-term debt less current
       portion                                    60,055              -              -        110,209        140,613
     Stockholders' equity (deficit)               35,914         (9,654)         2,724         21,913         37,946



                                                          -4-




                                                                                                      
                                                                                                Three Months Ended
                                                                                            ----------------------------
                                                                                             March 29,      March 30,
                                                                                                2003          2002
------------------------------------------------------------------------------------------- ------------- --------------
                                                                                                   (unaudited)
                                                                                               (in thousands, except
                                                                                                     ratio and
                                                                                                  per share data)
Operating Data:
     Net sales                                                                                $ 68,651      $ 58,679
     Cost of sales and operating expenses                                                       51,050        43,745
     Selling, general and administrative expenses                                                8,520         7,158
     Depreciation and amortization                                                               3,657         4,088
                                                                                              --------      --------

     Operating income                                                                            5,424         3,688
     Interest expense                                                                             (492)       (3,885)
     Other expense, net                                                                            583           734
                                                                                              --------      --------

     Income from continuing operations before income taxes                                       5,515           537
     Income tax expense                                                                         (2,096)            -
                                                                                              --------      --------
     Income from continuing operations                                                           3,419           537
     Income from discontinued operations, net of tax                                                 -            46
                                                                                              --------      --------
     Net Income                                                                               $  3,419      $    583
                                                                                              ========      ========
     Basic earnings per common share                                                          $   0.05     $    0.04

     Diluted earnings per common share                                                        $   0.05     $    0.04
     Weighted average shares outstanding                                                        62,282        15,568
     Diluted weighted average shares outstanding                                                63,665        15,568
Other Data:
     EBITDA  (c)                                                                              $  9,081      $  7,776
     Depreciation                                                                                2,620         2,953
     Amortization                                                                                1,037         1,135
     Capital expenditures                                                                       (2,679)       (3,622)
Ratio of Earnings to Fixed Charges (d)                                                            4.36          1.13
Balance Sheet Data:
     Working capital (deficiency)                                                             $  5,873      $ (3,286)
     Total assets                                                                              158,554       154,456
     Current portion of long-term debt                                                           8,033         5,120
     Total long-term debt less current portion                                                  54,583       112,127
     Stockholders' equity (deficit)                                                             38,981        (9,071)




     (a) The fiscal years ended December 28, 2002,  December 29, 2001,  December
         30,  2000,  January 1, 2000 and  January 2, 1999 each  consisted  of 52
         weeks.

     (b) As disclosed in Note 1(b)(13) and Note 15 to the consolidated financial
         statements  included  elsewhere herein, the Company adopted SFAS 144 in
         Fiscal  2002.  SFAS 144  requires  the  classification  of  prior  year
         operating results of discontinued  operations to be consistent with the
         current  year   presentation.   Accordingly,   prior  years'  financial
         statements  reflect  reclassification  of the  Linkwood,  MD results as
         discontinued operations.

     (c) "EBITDA" represents,  for any relevant period,  operating income (loss)
         plus depreciation and amortization and impairment of long-lived assets.
         EBITDA is  presented  here not as a measure of operating  results,  but
         rather as a measure of the  Company's  debt service  ability and is not
         intended to be a presentation  in accordance  with  generally  accepted
         accounting principles.


                                      -5-







         Reconciliation of Net Cash Provided by Operating Activities To EBITDA (in thousands):
         ------------------------------------------------------------------------------------

                                                           2002       2001       2000      1999       1998
                                                           ----       ----       ----      ----       ----
                                                                                      

         Net cash provided by operating activities        34,132       5,612     16,243       803    25,465
         Interest                                          6,409      14,162     13,971    15,533    12,747
         Net cash provided by discontinued operations       (867)       (996)      (623)   (2,178)   (2,771)
         Change in working capital                        (4,602)      9,097     (4,478)    4,557   (16,788)
         Taxes                                             2,749           -          -       (31)      425
         Other Income                                     (2,001)      1,656        187    (1,805)    1,073
         Gain on the sale of assets                        1,563          80       (144)    2,060      (982)
                                                          ------     -------    -------   -------   -------
         EBITDA                                           37,383      29,611     25,156    18,939    19,169
                                                          ------     -------    -------   -------   -------


                                                                            March 29, 2003      March 30, 2002
                                                                            --------------      --------------
                                                                                        (unaudited)
         Net cash provided by operating activities                                4,184               4,906

         Interest                                                                   492               3,885
         Net cash provided by discontinued operations                                 -                (351)
         Change in working capital                                                2,600                (831)
         Taxes                                                                    1,577                   -
         Other Income                                                               233                (734)
         Gain on the sale of assets                                                  (5)               (901)
                                                                                  ------              ------
                                                                                  9,081               7,776
                                                                                  ------              ------

         


     (d) For  purposes of  calculating  the ratio of earnings to fixed  charges,
         earnings  consist of income (loss) from  continuing  operations  before
         income  taxes and fixed  charges.  Fixed  charges  consist of  interest
         expense, and one-third of rental expense deemed to be the equivalent of
         interest.  For the years  ended  December 29, 2001,  December 30, 2000,
         January 1, 2000 and  January 2, 1999,  earnings  were  insufficient  to
         cover fixed charges of $11.1 million,  $15.9 million, $25.5 million and
         $24.9 million, respectively.



                                      -6-



                       Ratio of Earnings to Fixed Charges
                 (in thousands, except ratio and per share data)



                                                                                            
                                               December 28,  December 29,    December 30,    January 1,    January 2,
                                                   2002          2001            2000           2000          1999
---------------------------------------------- ------------- -------------- --------------- ------------- --------------
     Income (loss) from continuing
      operations before income taxes             $ 16,549      $(11,105)      $(15,861)       $(25,523)     $(24,935)
        Fixed charges:
           Interest expense                         6,409        14,162         13,971          15,533        12,747
           Estimated interest within rental
             expense                                1,409         1,382          1,069             851           543
           Preference security dividend
             requirements                           1,756             -              -               -             -
                                                 --------     ---------     ----------      ----------     ---------
       Total fixed charges                          9,574        15,544         15,040          16,384        13,290
                                                 --------     ---------     ----------      ----------     ---------
       Earnings (loss) before preference
         security dividend                         26,123         4,439           (821)         (9,139)      (11,645)
       Less preference security dividend
         requirements                              (1,756)            -              -               -             -
                                                 --------     ---------     ----------      ----------     ---------
                                                                      -                              -             -
       Earnings (loss)                           $ 24,367     $   4,439     $     (821)     $   (9,139)     $(11,645)
                                                 ========     =========     ==========      ==========     =========

     Ratio of earnings to fixed charges              2.55          0.29             -                -             -
     Deficiency in income to cover fixed
     charges                                     $      -     $ (11,105)    $ (15,861)      $  (25,523)     $(24,935)


                                                                                                Three Months Ended
                                                                                           -----------------------------
                                                                                             March 29,      March 30,
                                                                                               2003           2002
                                                                                                   (unaudited)
------------------------------------------------------------------------------------------ -------------- --------------
Income from continuing operations before income taxes                                       $   5,515      $     537
    Fixed charges:
       Interest expense                                                                           492          3,885
       Estimated interest within rental expense                                                   405            317
       Preference security dividend requirements                                                  573              -
                                                                                            ----------     ---------
    Total fixed charges                                                                         1,470          4,202
                                                                                            ----------     ---------
    Earnings before preference security dividend                                                6,985          4,739

    Less preference security dividend requirements                                               (573)             -
                                                                                            ----------     ---------
    Earnings                                                                                    6,412          4,739
                                                                                            ==========     =========
   Ratio of earnings to fixed charges                                                            4.36           1.13
   Deficiency in income to cover fixed charges                                                      -              -





                                                           -7-




                                  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." We urge you to particularly  evaluate
the following  risks before  deciding to purchase our Series A Preferred  Stock.
Various  statements in this  prospectus  (including  some of the following  risk
factors)  constitute  forward-looking  statements.  Please  refer to the section
entitled "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 and fulfill our  obligations  under the Series A
Preferred Stock.

         We  have  a  significant   amount  of  indebtedness.   Our  substantial
indebtedness  could have important  consequences  to the holders of our Series A
Preferred 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;

         o    our level of  indebtedness  may prevent us from  raising the funds
              necessary  to redeem all of the Series A Preferred  Stock upon the
              occurrence of a change of control or sale of all or  substantially
              all of our  assets as  described  under  "Description  of  Capital
              Stock--Preferred Stock--Series A Preferred Stock;" 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 described under
"Description  of 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 the Series A
Preferred Stock and common stock.


                                       -8-





         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 million, $19.2 million and $16.0 million, respectively. However, following
the  Recapitalization  completed  in May 2002,  as  described  below  under "The
Recapitalization,"  we reported a net profit of $9.0  million for the year ended
December  28, 2002 and $3.4 million for the quarter  ended March 29,  2003.  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 the 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;


                                       -9-





         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.

         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.  See "Description of
Senior Credit Agreement."

Ranking of the Series A Preferred Stock and 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
the Series A Preferred Stock and common stock.

         Our  obligations  with  respect  to the  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.

         While  any  shares of the  Series A  Preferred  Stock are  outstanding,
without the written consent of 66 2/3% of the outstanding shares of the Series A
Preferred Stock, we may not create, authorize, issue or reclassify

         o    any  class  of  stock  ranking  prior  or  equal  to the  Series A
              Preferred  Stock with respect to  dividends  or upon  liquidation,
              dissolution, winding up or otherwise; or

         o    any security that is convertible or exchangeable into such stock.

Dividends--our  ability to pay any dividends on the Series A Preferred Stock may
be limited.

         We cannot  assure the holders of the Series A  Preferred  Stock that we
will be able to pay dividends on the Series A Preferred Stock.

         Our  ability  to pay any  cash or  noncash  dividends  on the  Series A
Preferred  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 the Series A Preferred  Stock so
long as any  indebtedness  or

                                      -10-



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 the Series A Preferred 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 the Series A Preferred  Stock that we will be able
to pay dividends on the Series A Preferred Stock.

Inability to redeem the Series A Preferred Stock prior to or at maturity--we may
not have  sufficient  funds to make a change of control or sale of assets  offer
when  required  by the  certificate  of  designation  relating  to the  Series A
Preferred Stock because of prohibitions in our senior credit agreement.

         In the event  that we  experience  a change of  control  or sell all or
substantially  all of our assets,  we cannot  assure the holders of the Series A
Preferred  Stock  that we would  have  sufficient  funds to  satisfy  all of our
obligations under the senior credit agreement and the Series A Preferred Stock.

         If we experience a change of control or sell all or  substantially  all
of our assets, to the extent we have legally available funds for the payment, we
must offer to redeem all shares of Series A Preferred Stock then  outstanding in
cash.  However,  we are prohibited by the senior credit agreement from redeeming
any  shares  of our  Series A  Preferred  Stock so long as any  indebtedness  or
commitments  remain  outstanding under the senior credit  agreement.  The senior
credit  agreement  also provides  that a change of control  event  constitutes a
default under the senior credit  agreement.  See  "Description  of Senior Credit
Agreement."  We may also become a party to, or guarantor  under,  future  credit
agreements  or other  agreements  relating to senior  indebtedness  that contain
similar restrictions or provisions.

         If we experience a change of control or sell all or  substantially  all
of our assets  when we are  prohibited  from  redeeming  the Series A  Preferred
Stock,  we could  seek the  consent  of the  lenders  under  the  senior  credit
agreement to redeem the Series A Preferred  Stock or could  attempt to refinance
the borrowings that contain the prohibition. If we do not obtain the consent and
do not refinance the borrowings,  we would remain  prohibited from redeeming the
Series A Preferred Stock. This could have adverse consequences to the holders of
the Series A Preferred  Stock as well as us. If a default occurs with respect to
any senior  indebtedness,  the  subordination  provisions of the  certificate of
designation  relating to the Series A Preferred Stock would restrict payments to
the holders of the Series A Preferred Stock.

There is no prior  market for the Series A  Preferred  Stock and  holders of the
Series A Preferred  Stock cannot be assured that an active  trading  market will
develop for the Series A Preferred  Stock.  If an active  trading market for the
Series A Preferred Stock does not develop, the liquidity and value of the Series
A Preferred Stock could be harmed.

         The shares of Series A Preferred  Stock are  securities for which there
is currently no trading  market.  If an active  trading  market for the Series A
Preferred  Stock  does not  develop,  the  liquidity  and value of the  Series A
Preferred  Stock  could be harmed.  We do not intend to apply for listing of the
Series A Preferred  Stock on any securities  exchange or  interdealer  quotation
system.

Material tax  considerations  for the Series A Preferred  Stock--holders  of the
Series A  Preferred  Stock  will have to  recognize  income in  advance of their
receipt of the cash attributable to this income.

         Section  305(c) of the Internal  Revenue Code  provides that the entire
amount of a redemption  premium with respect to preferred  stock that is subject
to  mandatory  redemption  (such as the Series A Preferred  Stock) is treated as
being  distributed to the holders of such preferred stock on an economic accrual
basis  over the period the stock is  outstanding  notwithstanding  that the cash
attributable to the redemption  premium will not be received by the holder until
a  subsequent  period.  Preferred  stock  generally  is  considered  to  have  a
redemption  premium  for this  purpose if the price at which it must be redeemed
exceeds its issue price by more than a de minimis amount. The Series A Preferred
Stock provides for cumulative  preferred  dividends.  Thus, the redemption price
will  depend  on  whether  dividends  on such  stock  are  paid  currently.  The
legislative history of section 305(c) states that if at the time


                                      -11-




of issuance of cumulative  preferred stock there is "no intention" for dividends
to be paid currently, the IRS may treat such dividends as a disguised redemption
premium. Under that approach, the excess of the redemption price of the Series A
Preferred  Stock  (including  any disguised  redemption  premium) over its issue
price is taxable as  constructive  distributions  to the  holder  (treated  as a
dividend to the extent of our  company's  current and  accumulated  earnings and
profits)  over the term of the  preferred  stock using a constant  interest rate
method similar to that for accruing  original issue  discount.  To date, the IRS
has  not  promulgated  such  regulations,   although  the  issue  remains  under
consideration.  In the current situation, we intend to take the position that we
do not have "no  intention"  to pay  dividends  currently  (although  our senior
credit  agreement  prohibits  us  from  paying  any  cash  dividends  while  any
indebtedness  remains outstanding under such agreement) and thus that holders of
the Series A Preferred  Stock  should not be required to treat any excess of the
final  redemption  price  over  the  issue  price as a  series  of  constructive
distributions  over the  period  such stock is  outstanding.  This issue is not,
however,  free from  doubt.  Holders  of Series A  Preferred  Stock are urged to
consult  their tax  advisors  with  respect to this issue.  For a more  detailed
discussion of the U.S.  Federal  income tax  consequences  to the holders of the
Series A  Preferred  Stock of the  ownership  and  disposition  of the  Series A
Preferred Stock, see "Material U.S. Federal Tax Considerations."

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 the 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.  We may not,  without the approval of 66 2/3% of the then
outstanding  Series A  Preferred  Stock,  issue any  securities  senior to or on
parity  with  the  Series  A  Preferred  Stock.  None of the  provisions  of the
certificate of designation  relating to the Series A Preferred Stock affords the
holders  of the Series A  Preferred  Stock  protection  in the event of a highly
leveraged or other transactions that might adversely affect their interests.

Volatility  of Share  Price--the  market  price of our Series A Preferred  Stock
could be volatile.

         The market  price of our common  stock has been  subject to  volatility
and, in the future,  the market price of our common stock and Series A Preferred
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 Series A  Preferred  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

                                      -12-



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.

         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 the  Series A  Preferred
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
the Series A Preferred Stock and 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.

                                      -13-



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 Series A Preferred 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 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 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.


                                      -14-




                                RECAPITALIZATION


The Recapitalization Transactions

         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. See "Description of the Senior Credit Agreement";

         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  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
              Series A Preferred Stock issued to them.


                                      -15-





                                 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.

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is quoted and traded on the American Stock Exchange
under the symbol "DAR." The table below presents, for the fiscal quarters
indicated, the high and low closing sales prices per share for each such fiscal
quarter.



                              2003                   2002                    2001
                        ----------------        ----------------       ----------------
Fiscal Quarter          High        Low         High        Low        High        Low
--------------          ----        ---         ----        ---        ----        ---
                                                                

First Quarter            $2.25      $1.72       $1.30       $0.30      $1.25      $0.44
Second Quarter                                   0.90        0.55       0.84       0.50
Third Quarter                                    1.50        0.67       1.00       0.50
Fourth Quarter                                   1.90        0.85       0.91       0.50




         On May 28,  2003,  the closing  sales price of our common  stock on the
American Stock  Exchange was $2.10.  We have been notified by our stock transfer
agent that as of April 21, 2003,  there were 100 holders of record of our common
stock.


                                 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.

                                      -16-



                                 CAPITALIZATION


         The following table sets forth the  capitalization of our company as of
March 29, 2003.




                                                                        
                                                                               March 29, 2003
                                                                               (in thousands)
                                                                           ------------------------

         Cash and cash equivalents.......................................          $ 10,863
                                                                                   ========

         Current portion of long-term debt...............................          $  8,033

         Long-term debt, less current portion ...........................            54,583

         Series A 6% Cumulative Redeemable Preferred Stock, $0.01 par
         value; 1,000,000 shares authorized; 100,000 shares issued and                8,955
         outstanding.....................................................

         Shareholders' Equity (Deficit):

             Common stock, $0.01 par value per share; 100,000,000 shares
             authorized; and 62,302,448 shares issued and outstanding ...               623

         Additional paid-in capital......................................            74,395

         Treasury stock, at cost; 21,000 shares                                        (172)

         Accumulated comprehensive loss                                              (3,907)

         Accumulated deficit.............................................           (31,958)
                                                                                   --------

         Total shareholders' equity......................................            38,981
                                                                                   --------

               Total Capitalization......................................          $110,552
                                                                                   ========



                                      -17-



                 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

         The following selected historical consolidated financial data should be
read in  conjunction  with  "Management's  Discussion  and Analysis of Financial
Condition  and Results of  Operations"  and our audited  consolidated  financial
statements  and related  notes  thereto  and  unaudited  consolidated  financial
statements and related notes thereto included elsewhere in this prospectus.


                                                                        Fiscal Year Ended (a)
                                              -------------------------------------------------------------------------

                                               December 28,  December 29,   December 30,    January 1,     January 2,

                                                 2002(b)        2001(b)        2000(b)        1999(b)       1999 (b)
--------------------------------------------- -------------- -------------- -------------- -------------- -------------
                                                             (in thousands, except ratio and share data)
                                                                                           

Operating Data:
     Net sales                                  $262,236       $242,964       $229,273       $244,036       $318,706
                                               ---------      ---------      ---------      ---------      ---------
     Cost of sales and operating expenses        194,559        185,019        177,638        198,646        267,190
     Selling, general and administrative
       expenses                                   30,294         28,334         26,479         26,451         32,347
     Depreciation and amortization                16,426         24,898         26,859         30,734         30,284
                                               ---------      ---------      ---------      ---------      ---------

     Operating income (loss)                      20,957          4,713         (1,703)       (11,795)       (11,115)
     Interest expense                              6,409         14,162         13,971         15,533         12,747
     Other (income) expense, net                  (2,001)         1,656            187         (1,805)         1,073
                                               ---------      ---------      ---------      ---------      ---------
     Income (loss) from continuing
       operations before income taxes             16,549        (11,105)       (15,861)       (25,523)       (24,935)
     Income tax expense (benefit)                  7,183              -              -         (9,942)        (8,887)
                                               ---------      ---------      ---------      ---------      ---------
     Income (loss) from continuing
       operations                                  9,366        (11,105)       (15,861)       (15,581)       (16,048)
     Loss from discontinued operations,
       net of tax                                   (403)          (740)        (3,328)          (452)       (16,045)
                                               ---------      ---------      ---------      ---------      ---------
     Net Income  (loss)                           $8,963       $(11,845)      $(19,189)      $(16,033)      $(32,093)
                                               =========      =========      =========      =========      =========
     Basic earnings (loss) per common share        $0.18         $(0.76)        $(1.23)        $(1.03)        $(2.06)
     Diluted earnings (loss) per common
       share                                       $0.18         $(0.76)        $(1.23)        $(1.03)        $(2.06)
     Weighted average shares outstanding          45,003         15,568         15,568         15,560         15,581
     Diluted weighted average shares
       outstanding                                45,577         15,568         15,568         15,560         15,581
Other Data:
     EBITDA  (c)                                 $37,383        $29,611        $25,156        $18,939        $19,169
     Depreciation                                 12,146         19,642         21,219         24,820         24,298
     Amortization                                  4,280          5,256          5,640          5,914          5,986
     Capital expenditures                         13,433          8,847          7,287          9,446         14,345
Ratio of Earnings to Fixed Charges (d)              2.55           0.29              -              -              -
Balance Sheet Data:
     Working capital (deficiency)                 $9,152      $(116,718)     $(106,809)       $(5,223)        $3,070
     Total assets                                162,912        159,079        174,505        197,804        263,166
     Current portion of long-term debt             8,372        120,053        109,528          7,810          7,717
     Total long-term debt less current
       portion                                    60,055              -              -        110,209        140,613
     Stockholders' equity (deficit)               35,914         (9,654)         2,724         21,913         37,946



                                                         -18-





                                                                                                      
                                                                                                Three Months Ended
                                                                                            ----------------------------
                                                                                             March 29,      March 30,
                                                                                                2003          2002
------------------------------------------------------------------------------------------- ------------- --------------
                                                                                                   (unaudited)
                                                                                               (in thousands, except
                                                                                                     ratio and
                                                                                                  per share data)
Operating Data:
     Net sales                                                                                $ 68,651      $ 58,679
     Cost of sales and operating expenses                                                       51,050        43,745
     Selling, general and administrative expenses                                                8,520         7,158
     Depreciation and amortization                                                               3,657         4,088
                                                                                              --------      --------

     Operating income                                                                            5,424         3,688
     Interest expense                                                                             (492)       (3,885)
     Other expense, net                                                                            583           734
                                                                                              --------      --------

     Income from continuing operations before income taxes                                       5,515           537
     Income tax expense                                                                         (2,096)            -
                                                                                              --------      --------
     Income from continuing operations                                                           3,419           537
     Income from discontinued operations, net of tax                                                 -            46
                                                                                              --------      --------
     Net Income                                                                               $  3,419      $    583
                                                                                              ========      ========
     Basic earnings per common share                                                          $   0.05      $   0.04
     Diluted earnings per common share                                                        $   0.05      $   0.04
     Weighted average shares outstanding                                                        62,282        15,568
     Diluted weighted average shares outstanding                                                63,665        15,568
Other Data:
     EBITDA  (c)                                                                              $  9,081      $  7,776
     Depreciation                                                                                2,620         2,953
     Amortization                                                                                1,037         1,135
     Capital expenditures                                                                       (2,679)       (3,622)
Ratio of Earnings to Fixed Charges (d)                                                            4.36          1.13
Balance Sheet Data:
     Working capital (deficiency)                                                             $  5,873      $  3,286
     Total assets                                                                              158,554       154,456
     Current portion of long-term debt                                                           8,033         5,120
     Total long-term debt less current portion                                                  54,583       112,127
     Stockholders' equity (deficit)                                                             38,981        (9,071)





     (a) The fiscal years ended December 28, 2002,  December 29, 2001,  December
         30,  2000,  January 1, 2000 and  January 2, 1999 each  consisted  of 52
         weeks.

     (b) As disclosed in Note 1(b)(13) and Note 15 to the consolidated financial
         statements  included  elsewhere herein, the Company adopted SFAS 144 in
         Fiscal  2002.  SFAS 144  requires  the  classification  of  prior  year
         operating results of discontinued  operations to be consistent with the
         current  year   presentation.   Accordingly,   prior  years'  financial
         statements  reflect  reclassification  of the  Linkwood,  MD results as
         discontinued operations.

     (c) "EBITDA" represents,  for any relevant period,  operating income (loss)
         plus depreciation and amortization and impairment of long-lived assets.
         EBITDA is  presented  here not as a measure of operating  results,  but
         rather as a measure of the  Company's  debt service  ability and is not
         intended to be a presentation  in accordance  with  generally  accepted
         accounting principles.


                                      -19-






         Reconciliation of Net Cash Provided by Operating Activities to EBITDA (in thousands):
         ------------------------------------------------------------------------------------

                                                          2002       2001       2000      1999       1998
                                                          ----       ----       ----      ----       ----
                                                                                     

         Net cash provided by operating activities       34,132       5,612     16,243       803    25,465

         Interest                                         6,409      14,162     13,971    15,533    12,747
         Net cash provided by discontinued operations      (867)       (996)      (623)   (2,178)   (2,771)
         Change in working capital                       (4,602)      9,097     (4,478)    4,557   (16,788)
         Taxes                                            2,749           -          -       (31)      425
         Other Income                                    (2,001)      1,656        187    (1,805)    1,073
         Gain on the sale of assets                       1,563          80       (144)    2,060      (982)
                                                         ------      ------     ------    ------    ------
         EBITDA                                          37,383      29,611     25,156    18,939    19,169
                                                         ------      ------     ------    ------    ------

                                                                              March 29, 2003      March 30, 2002
                                                                              --------------      --------------
                                                                                          (unaudited)
           Net cash provided by operating activities                             4,184               4,906

           Interest                                                                492               3,885
           Net cash provided by discontinued operations                              -                (351)
           Change in working capital                                             2,600                (831)
           Taxes                                                                 1,577                   -
           Other Income                                                            233                (734)
           Gain on the sale of assets                                               (5)                901
                                                                                 -----               -----
           EBITDA                                                                9,081               7,776
                                                                                 -----               -----

         


     (d) For  purposes of  calculating  the ratio of earnings to fixed  charges,
         earnings  consist of income (loss) from  continuing  operations  before
         income  taxes and fixed  charges.  Fixed  charges  consist of  interest
         expense, and one-third of rental expense deemed to be the equivalent of
         interest.  For the years ended  December 29,  2001,  December 30, 2000,
         January 1, 2000 and  January 2, 1999,  earnings  were  insufficient  to
         cover fixed charges of $11.1 million,  $15.9 million, $25.5 million and
         $24.9 million, respectively.



                                      -20-




                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


         The  following  Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations  contains  forward-looking  statements  that
involve risks and uncertainties. Our actual results could differ materially from
those  anticipated  in these  forward-looking  statements as a result of certain
factors,  including  those  set forth  under  the  heading  "Risk  Factors"  and
elsewhere  in  this  prospectus.  The  following  discussion  should  be read in
conjunction with our consolidated financial statements and related notes thereto
included elsewhere in this prospectus.

General

         Darling is 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.

Results of Operations


3 Months Ended March 29, 2003 vs. 3 Months Ended March 30, 2002

         General. We recorded income from continuing  operations of $3.4 million
for the first quarter of the fiscal year ending  January 3, 2004 (first  quarter
of Fiscal  2003),  as  compared  to income from  continuing  operations  of $0.5
million for the first quarter of the fiscal year ended  December 28, 2002 (first
quarter of Fiscal  2002),  an  improvement  of $2.9 million.  Principal  factors
affecting  these  comparative  results,  which  are  discussed  further  in  the
following section were higher sales prices and lower interest expense, partially
offset by higher raw material prices,  lower yield on production,  higher energy
expense, payroll and related benefits, and higher income tax expense.

         Net sales. We collect and process animal  by-products  (fat,  bones and
offal) and used restaurant  cooking oil to produce finished  products of tallow,
protein, and yellow grease.  Sales are significantly  affected by finished goods
prices,  quality of raw material,  and volume of raw material. Net sales include
the sales of produced finished goods, collection fees, grease trap services, and
finished goods purchased for resale,  which  constitutes  approximately  6.8% of
total sales for the first quarter of Fiscal 2003 and approximately 8.8% of total
sales for the first quarter of Fiscal 2002.

         During the first quarter of Fiscal 2003,  net sales  increased by $10.0
million (17.0%), to $68.7 million, as compared to $58.7 million during the first
quarter  of Fiscal  2002,  primarily  due to the  following:  (1)  increases  in
aggregate finished goods prices resulted in an $8.8 million increase in sales in
the first quarter of Fiscal 2003,  compared to the first quarter of Fiscal 2002,
(average yellow grease prices increased  50.4%;  average tallow prices increased
51.1%;  and average  protein  prices  decreased  1.7%);  (2)  finished  products
purchased for resale increased $1.3 million; (3) improved recovery of collection
expenses,  $0.6 million;  and (4) other net increase of $0.3 million;  partially
offset by (5) lower yields on production of finished  goods  decreased  sales by
$1.0 million.

                                      -21-




         Cost of Sales  and  Operating  Expenses.  Cost of sales  and  operating
expenses  include  prices paid to raw  material  suppliers,  the cost of product
purchased  for resale,  and the cost to collect and  process  raw  material.  We
utilize  both  fixed  and  formula  pricing  methods  for  the  purchase  of raw
materials.  Fixed prices are adjusted  where possible for changes in competition
and  significant  changes in market  conditions.  Raw materials  purchased under
formula prices are correlated with specific finished goods prices.

         During the first  quarter of Fiscal 2003,  cost of sales and  operating
expenses  increased  $7.4 million  (16.9%) to $51.1 million as compared to $43.7
million  during the first  quarter of Fiscal 2002  primarily as a result of: (1)
higher  raw  material  prices of $2.5  million,  which are due in part to higher
finished   product  prices,   which  increase   formula  raw  material   pricing
arrangements  with raw  material  suppliers;  (2)  higher  energy  prices,  $1.5
million;  (3) higher finished  products  purchased for resale  increased cost of
sales $1.3  million;  (4) higher  factory  and  collection  payroll  and related
benefits of $0.8  million;  (5) higher fleet fuel  expense,  $0.4  million;  (6)
higher insurance  expense of $0.3 million;  and (7) other expense increased $0.6
million.

         Selling,   General  and  Administrative  Costs.  Selling,  general  and
administrative  costs were $8.5 million during the first quarter of Fiscal 2003,
a $1.3 million  increase from $7.2 million for the first quarter of Fiscal 2002,
primarily  due to  increases  in employee  benefits of $1.1  million,  and other
increases of $0.2 million.

         Depreciation and  Amortization.  Depreciation and amortization  charges
decreased  $0.4 million to $3.7 million  during the first quarter of Fiscal 2003
as  compared  to $4.1  million  during  the first  quarter of Fiscal  2002.  The
decrease is primarily  due to various  property and  equipment  assets  becoming
fully depreciated during Fiscal 2002.

         Interest  Expense.  Interest  expense  decreased $3.4 million from $3.9
million during the first quarter of Fiscal 2002 to $0.5 million during the first
quarter of Fiscal 2003,  primarily due to changes  resulting  from the effect of
the  provisions  of SFAS 15 as they apply to our May 13,  2002  Recapitalization
Agreement (see note 6 to the consolidated  financial  statements for the quarter
ended March 29, 2003 included elsewhere herein),  which reduced interest expense
on bank debt by approximately $2.0 million,  and due to forbearance fees accrued
in the first quarter of Fiscal 2002 of approximately $1.4 million.

         Other Income (Expense).  Other income (expense)  decreased $0.1 million
from net other income of $0.7 million during the first quarter of Fiscal 2002 to
net other  income of $0.6  million  during  the first  quarter  of Fiscal  2003,
primarily due to inclusion of a gain on  extinguishment of debt of $0.8 million,
which resulted from retirement of debt with a carrying value of $4.9 million and
a cash payment of $4.1 million, due to SFAS 15 accounting, and other net expense
of $0.2  million.  Included in net other  income in the first  quarter of Fiscal
2002 was a gain of $1.0 million  resulting from insurance  proceeds  received in
excess of net book value of assets  destroyed by fire at the Company's  Norfolk,
NE facility, and other net expense of $0.3 million.

         Income Taxes.  Our recorded  income tax expense of $2.1 million  during
the first  quarter of Fiscal 2003 is based on our estimate of the  effective tax
rate for the entire year.

         Capital Expenditures.  We made capital expenditures of $2.7 million and
acquired  rendering and grease  businesses for a net investment of approximately
$1.1 million,  which included  machinery,  equipment and routes during the first
quarter of Fiscal 2003 compared to capital  expenditures  of $3.6 million during
the first quarter of Fiscal 2002, an increase of $0.2 million.


52 Week Fiscal Year Ended  December  28, 2002  (Fiscal  2002) vs. 52 Week Fiscal
Year Ended December 29, 2001 (Fiscal 2001)

         General.  We  reported a sales  increase  of $19.2  million  (7.9%) for
Fiscal 2002 and operating  income of $21.0 million  compared to operating income
of $4.7 million in Fiscal  2001,  an  improvement  of $16.3  million.  Principal
factors affecting these comparative results,  which are discussed further in the
following section, were: (1) higher finished goods prices; (2) higher collection
fees which  improved  recovery of collection  expenses;  (3) lower  depreciation
expense;  and (4) lower  energy  expense;  partially  offset by (5)  higher  raw
material prices.  We reported income from continuing  operations of $9.4 million
for Fiscal 2002 compared to a loss from  continuing  operations of $11.1 million
for Fiscal 2001, an improvement of $20.5 million.

                                      -22-



         Net Sales.  During  Fiscal 2002,  net sales  increased by $19.2 million
(7.9%) to $262.2  million as compared to $243.0  million during Fiscal 2001. The
increase in net sales was primarily due to the following: (1) favorable finished
goods prices  resulted in a $15.7 million  increase  (our average  yellow grease
prices  increased  15.4%,  average tallow prices  increased  13.3%,  and average
protein prices decreased 0.2%);  (2) improved  recovery of collection  expenses,
$5.6  million;  and (3) improved  yields on production  increased  $0.9 million;
partially  offset by (4) raw material  inage  decrease,  $1.6 million;  (5) hide
sales decrease, $1.3 million; and (6) other net decreases, $0.1 million.

         Cost of Sales and Operating Expenses. During Fiscal 2002, cost of sales
and  operating  expenses  increased  $9.6  million  (5.2%) to $194.6  million as
compared to $185.0 million during Fiscal 2001. The increase in cost of sales and
operating  expenses was primarily due to the following:  (1) higher raw material
prices, $8.0 million; (2) higher payroll and related benefits, $5.1 million; (3)
higher  insurance  expense,  $1.4 million;  (4) higher contract hauling expense,
$1.0 million; (5) higher cost on sales of equipment, $0.6 million; and (6) other
net increases of $0.2 million;  partially  offset by (7) lower energy expense of
$6.3 million; and (8) lower inage of $0.4 million.


         Selling,   General  and  Administrative  Costs.  Selling,  general  and
administrative  expenses were $30.3  million  during Fiscal 2002, a $2.0 million
increase  (7.1%) from $28.3  million  during  Fiscal 2001,  primarily due to the
following: (1) higher payroll and related benefit expense of $0.9 million, which
included $1.0 million in charges for compensation to be paid to our former chief
executive  officer  over a  two-year  period due to the change in control of our
company;  (2)  higher  legal and  audit  expense  of $0.3  million;  (3)  higher
insurance expense of $0.2 million; (4) higher marketing, advertising and product
development  expense  of $0.2  million;  and (5)  other  net  increases  of $0.4
million.

         Depreciation and  Amortization.  Depreciation and amortization  charges
decreased $8.5 million (34.1%),  to $16.4 million during Fiscal 2002 as compared
to $24.9 million  during  Fiscal 2001.  The decrease is primarily due to various
property and equipment  assets  becoming fully  depreciated  during Fiscal 2002.
Included in Fiscal 2001,  depreciation and amortization expense is an impairment
charge of $0.8 million.

         Interest Expense. Interest expense was $6.4 million during Fiscal 2002,
compared  to $14.2  million  during  Fiscal  2001,  a decrease  of $7.8  million
(54.9%), primarily due to changes resulting from the effect of the provisions of
SFAS 15 as it applies to our  Recapitalization  (see Note 2 to the  consolidated
financial statements  elsewhere herein),  which reduced interest expense on bank
debt by approximately  $7.2 million;  reduced  interest  expense  resulting from
forbearance  fees of  approximately  $0.4 million;  and other  decreases of $0.2
million.

         Other Income (Expense). Other income was $2.0 million in Fiscal 2002, a
$3.7  million  increase  from  other  expense of $1.7  million  in Fiscal  2001.
Included  in other  income in Fiscal 2002 is: a gain of $1.7  million  resulting
from  insurance  proceeds  received  in excess  of the net book  value of assets
destroyed by fire at our Norfolk, Nebraska facility; a gain on extinguishment of
debt of $0.8 million,  which  resulted  from  retirement of debt with a carrying
value  of  $4.5  million  with a cash  payment  of $3.7  million  due to SFAS 15
accounting; and other net expense of $0.5 million. Included in net other expense
in Fiscal 2001 was: a loss on the early retirement of a non-compete liability of
$0.4 million;  fair value  adjustment  on interest rate swap  agreements of $1.4
million; and other net expense of $0.4 million; partially offset by gain related
to the ineffective portion of natural gas hedge transactions of $0.5 million.

         Income Taxes. We recorded income tax expense of $7.2 million for Fiscal
2002.  We also  recorded tax benefits of $2.2  million from  utilization  of net
operating  loss  carryforwards  which  arose  prior  to our  1993  "Fresh  Start
Reporting" as direct  increases to additional  paid in capital rather than as an
income tax benefit,  in accordance  with Statement of Position 90-7 (see Note 11
to the consolidated financial statements elsewhere herein).


                                      -23-


         We did not record a tax  benefit in 2001  because of the  inability  to
carryback net operating losses and the uncertainty of future taxable income.

         Discontinued   Operations.   We  recorded  a  loss  from   discontinued
operations in Fiscal 2002 of $0.4 million, compared to a loss of $0.7 million in
Fiscal  2001,  an  improvement  of $0.3  million.  The  loss  from  discontinued
operations both fiscal years relates to our Linkwood,  Maryland facility,  which
was sold October 18, 2002.  Included in the loss  incurred in Fiscal 2002, is an
impairment charge of $0.4 million,  recorded to reduce the carrying value of the
Linkwood assets to fair value, based upon the cash consideration of $4.3 million
received from the third party purchaser.

         Capital  Expenditures.  We made capital  expenditures  of $13.4 million
during  Fiscal 2002 as compared to $8.8 million in Fiscal  2001,  an increase of
$4.6 million  (52.3%).  The increase is primarily  due to expansion of our Sioux
City plant location,  completed  during the third quarter of Fiscal 2002,  which
will  process raw  material  inage from the  Norfolk,  Nebraska  plant which was
destroyed by fire.

52 Week Fiscal Year Ended  December  29, 2001  (Fiscal  2001) vs. 52 Week Fiscal
Year Ended December 30, 2000 (Fiscal 2000)

         General.  We  reported a sales  increase  of $13.7  million  (6.0%) for
Fiscal 2001 and  operating  income of $4.7  million  compared to a $1.7  million
operating loss in Fiscal 2000, an improvement of $6.4 million. Principal factors
affecting  these  comparative  results,  which  are  discussed  further  in  the
following  section,  were  higher  collection  fees which  improved  recovery of
collection  expenses,  favorable  finished goods prices,  and lower depreciation
expense,  partially  offset by higher  energy  expense.  We reported a loss from
continuing  operations  of $11.1 million for Fiscal 2001 compared to a loss from
continuing  operations  of $15.9  million for Fiscal  2000,  a reduction  of the
operating loss of $4.8 million.

         Net Sales.  During  Fiscal 2001,  net sales  increased by $13.7 million
(6.0%) to $243.0  million as compared to $229.3  million during Fiscal 2000. The
increase in net sales was primarily due to the following:  (1) improved recovery
of collection  expenses,  $9.2  million;  (2)  favorable  finished  goods prices
resulted in a $3.8 million  increase (our average yellow grease prices increased
6.7%,  average  tallow  prices  increased  10.4%,  and  average  protein  prices
decreased  3.2%);  (3) hide sales  increased  $2.0  million;  (4)  higher  inage
increased sales $1.9 million; (5) other net increases during Fiscal 2001 of $0.3
million; partially offset by (6) finished product purchased for resale decreased
$3.1 million; and (7) lower yields decreased sales $0.4 million.

         Cost of Sales and Operating Expenses. During Fiscal 2001, cost of sales
and  operating  expenses  increased  $7.4  million  (4.2%) to $185.0  million as
compared to $177.6 million during Fiscal 2000. The increase in cost of sales and
operating  expenses  was  primarily  due to the  following:  (1) energy  expense
increased $5.7 million;  (2) repairs expense increased $3.1 million;  (3) leased
vehicle expenses increased $1.0 million; (4) contract hauling expenses increased
$0.6  million;  (5) other net  increased  expenses  during  Fiscal  2001 of $0.1
million; partially offset by (6) finished product purchased for resale decreased
$3.1 million.


                                      -24-


         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative  expenses were $28.3  million  during Fiscal 2001, a $1.8 million
(6.8%),  $26.5  million  during  Fiscal 2000,  primarily  due to higher  payroll
expense.

         Depreciation and  Amortization.  Depreciation and amortization  charges
decreased $2.0 million  (7.4%),  to $24.9 million during Fiscal 2001 as compared
to $26.9  million  during  Fiscal 2000.  Included in Fiscal 2001 and Fiscal 2000
depreciation and amortization expense are impairment charges of $0.8 million and
$1.9 million, respectively.

         The Fiscal 2001  impairment  charge of $0.8 million  pertains solely to
assets held for sale in our rendering  business segment.  The impairment charges
were  necessary  to reduce the carrying  value of these  assets to  management's
estimate of their net realizable value in light of current economic  conditions.
Estimated net realizable values were based on information from business and real
estate  brokers,   comparable  sales,   property  tax  valuations  and  internal
discussions with our employees working in the geographic areas who were familiar
with the  specific  assets.  A summary  of the  impairment  charge  follows  (in
millions):

                          Land                              $0.1
                          Leaseholds and buildings           0.1
                          Equipment and furniture            0.6
                                                            -----
                                   Total impairment         $0.8
                                                            ====

         The Fiscal 2000 impairment charge of $1.9 million consists of: (1) $0.1
million  and $0.4  million  related  to  restaurant  services  business  segment
equipment and allocable goodwill,  respectively, and (2) $1.4 million related to
our rendering  business segment.  The impairment charges of the assets were made
to reduce the  carrying  value to estimated  fair value based on the  discounted
future  cash flows of the  assets,  or from  management's  estimate of their net
realizable  value based on information  from a business broker. A summary of the
impairment charge follows (in millions):

                                               Restaurant
                               Rendering        Services            Total
                               ---------       -----------          -----

        Leaseholds
          and buildings       $     0.3       $      --           $     0.3
        Equipment
          and furniture             1.1             0.1                 1.2
        Goodwill                     --             0.4                 0.4
                              ---------       ---------           ---------
        Total impairment      $     1.4       $     0.5           $     1.9
                              =========       =========           =========

         Interest  Expense.  Interest  expense was $14.2  million  during Fiscal
2001,  compared to $14.0 million during Fiscal 2000, an increase of $0.2 million
(1.4%).  The  effects of  amortization  of loan  forbearance  fees  included  in
interest  expense of $2.1 million and higher debt levels during Fiscal 2001 were
partially offset by declining interest rates on our floating rate debt.

         Other Income  (Expense).  Other income (expense) in Fiscal 2001 was net
other expense of $1.7 million,  compared to net other expense of $0.2 million in
Fiscal 2000, an increase in expense of $1.5  million.  Included in other expense
in Fiscal 2001 were fair value  adjustments on interest rate swap  agreements of
$1.4 million and loss on the early retirement of a non-compete agreement of $0.4
million,  partially offset by gain related to the ineffective portion of natural
gas hedge transactions of $0.5 million. Included in other expense in Fiscal 2001
were bank service charges and closed plant expenses,  partially  offset by gains
on the sale of fixed assets.

         Income Taxes. We did not record a tax benefit in Fiscal 2001 because of
the inability to carryback net operating  losses and the  uncertainty  of future
taxable income.

                                      -25-



         Discontinued   Operations.   We  recorded  a  loss  from   discontinued
operations in Fiscal 2001,  of $0.7 million,  compared to a loss of $3.3 million
in Fiscal 2000, an  improvement  of $2.6 million.  The losses from  discontinued
operations in both Fiscal 2001 and Fiscal 2000 relate to our Linkwood,  Maryland
facility,  which was sold October 18, 2002; the loss in Fiscal 2000 includes our
Bakery By-Products Recycling business segment,  which was sold in 1999. Included
in the loss incurred in Fiscal 2000,  is an  impairment  charge of $2.1 million,
recorded to reduce the carrying  value of the Linkwood  assets to estimated fair
value, based upon the estimated  discounted cash flows of the Linkwood facility.
Also included in the Fiscal 2000 loss is a net gain of $0.4 million  recorded on
the Bakery  By-Products  Recycling business segment as a result of adjustment of
an   indemnification   liability  in  Fiscal  2000,  upon   termination  of  the
indemnification period.

         Capital  Expenditures.  We made  capital  expenditures  of $8.8 million
during  Fiscal 2001 as compared to $7.3 million in Fiscal  2000,  an increase of
$1.5 million  (20.5%).  Fiscal 2001 capital  expenditures  were principally for:
operating   equipment,    $5.8   million;    vehicles   (primarily   trucks   or
tractor-trailers),  $1.6 million;  office  equipment,  $1.2  million;  and other
capital  expenditures,  $0.5  million.  We  incurred  $0.3  million  of  capital
expenditures at our Linkwood, Maryland facility, which has been accounted for as
a discontinued operation.

Financing, Liquidity and Capital Resources


         As described  further  under  "Recapitalization"  on May 13,  2002,  we
consummated the  Recapitalization and executed a new amended and restated credit
agreement with our lenders. The credit agreement reflects the effect of applying
the provisions of Statement of Financial Accounting Standards No. 15, Accounting
by Debtors and  Creditors for Troubled  Debt  Restructurings  (SFAS 15). SFAS 15
requires that the previously  existing  amount of debt owed by us to the lenders
be reduced by the fair value of the  equity  interest  granted  and that no gain
from restructuring our bank debt be recognized.  As a result the carrying amount
of the term  loan of $62.5  million  exceeds  its  contractual  amount  of $52.3
million by $10.2  million at March 29, 2003.  Interest  expense on the remaining
carrying  amount of debt reported in our financial  statements is based on a new
effective interest rate (0.20% at March 29, 2003) that equates the present value
of the future cash payment  specified by the new terms of the term loan with the
carrying amount of the debt.

         In connection with the  Recapitalization  and our entry into the credit
agreement,  we  exchanged  borrowings  outstanding  under  our  previous  credit
agreement,   a  portion  of  the  accrued  interest  and  commitment  fees,  and
forbearance  fees payable for  46,705,086  shares of newly issued  common stock,
equal to 75% of our then total outstanding common stock on a fully diluted basis
(exclusive of stock options  issued and  outstanding),  and 100,000 shares of 6%
cumulative redeemable Series A Preferred Stock with a liquidation  preference of
$100 per share and a face value of $10.0  million,  recorded  at a  discount  of
approximately $1.9 million,  resulting in a yield of 10%, which approximates the
market  yield  at the date of  issue.  The term  loan and the  revolving  credit
facility   (under   which  there  were  no   borrowings   at  the  date  of  the
Recapitalization) mature on May 10, 2007.

                                      -26-



         Our credit  agreement  consists of the following  elements at March 29,
2003 (in thousands):


                 Term loan:
                      Contractual amount             $  52,266
                      SFAS 15 effect                    10,187
                                                      --------
                      Carrying amount                $  62,453
                                                      ========

                 Revolving credit facility:
                      Maximum availability           $  17,337
                      Borrowings outstanding                 -
                      Letters of credit issued           8,950
                                                     ---------
                      Availability                  $    8,387
                                                     =========

         Substantially  all of our  assets are either  pledged or  mortgaged  as
collateral  for  borrowings  under the credit  agreement.  The credit  agreement
contains certain terms and covenants,  which, among other matters,  restrict the
incurrence  of  additional  indebtedness,  the  payment of cash  dividends,  the
retention of certain  proceeds  from sales of assets,  and the annual  amount of
capital expenditures,  and requires the maintenance of certain minimum financial
ratios.  As of  March  29,  2003,  no  cash  dividends  could  be  paid  to  our
stockholders pursuant to the credit agreement.

         The  classification of long-term debt in the accompanying  December 28,
2002 and March 29, 2003 consolidated  balance sheets is based on the contractual
and  excess  cash flow  repayment  terms of the debt  issued  under  the  credit
agreement  pursuant  to  the   Recapitalization.   At  December  29,  2001,  all
indebtedness  was  classified as a current  liability  because the former credit
agreement  had a  maturity  date of June  30,  2001,  and we were  subject  to a
forbearance  agreement.  Under the  terms of the  credit  agreement,  25% of the
excess cash flow (as defined in the credit  agreement)  in Fiscal 2002 is due to
the lenders in Fiscal 2003.  Included in current maturities of long-term debt at
December  28,  2002,  is $4.2  million,  due under this  provision of the credit
agreement.

         On March 29,  2003,  we had  working  capital of $5.9  million  and our
working  capital  ratio was 1.13 to 1. On  December  28,  2002,  we had  working
capital of $9.2 million a our working  capital ratio was 1.19 to 1 compared to a
working capital deficit of $116.7 million and a working capital ratio of 0.26 to
1 on December 29, 2001.  At March 29, 2003,  we had  unrestricted  cash of $10.7
million and funds available under the revolving credit facility of $8.4 million.

         Net cash  provided by  operating  activities  was $4.2 million and $4.9
million  in the  first  quarter  ending  March  29,  2003 and  March  30,  2002,
respectively.  Cash used by investing  activities  was $3.8  million  during the
first  quarter  ending  March 29,  2003  compared  to $2.7  million in the first
quarter  ending March 30, 2002.  Net cash used by financing  activities was $5.1
million in the first quarter ending March 29, 2003 compared to cash used of $2.9
million  in  the  first  quarter  ending  March  30,  2002,  principally  due to
reductions of long-term debt.

                                      -27-


         Net cash  provided by  operating  activities  was $34.1  million,  $5.6
million,  and $16.2  million  in  Fiscal  2002,  Fiscal  2001 and  Fiscal  2000,
respectively. Net cash provided by operating activities in Fiscal 2002 increased
principally  due to an  increase  in our  profitability  resulting  from  higher
finished goods prices,  higher  collection fees, and lower energy expense.  Cash
used by investing  activities  was $8.1 million  during  Fiscal 2002 compared to
$9.3 million in Fiscal  2001;  the $1.2  million  decrease is  primarily  due to
increased capital expenditures for machinery and equipment, net of proceeds from
the sale of our  Linkwood,  Maryland  facility  and  insurance  proceeds  on the
Norfolk,  Nebraska facility which was destroyed by fire in Fiscal 2001. Net cash
used by financing  activities  was $14.2 million in Fiscal 2002 compared to cash
provided  of $3.8  million in Fiscal  2001,  principally  due to  reductions  of
long-term debt in the Fiscal 2002 period  compared to additions to  indebtedness
during Fiscal 2001.

         Based upon current actuarial  estimates,  we do not expect any payments
will be necessary in order to meet minimum pension funding  requirements  during
Fiscal 2003.

         Our management  believes that cash flows from  operating  activities at
the current level in Fiscal 2003,  unrestricted  cash, and funds available under
the credit  agreement should be sufficient to meet our working capital needs and
capital  expenditures  for at least the next 12  months.  However,  the  current
economic  environment  in our markets has the potential to adversely  impact our
liquidity  in a variety of ways,  including  through  reduced  sales,  potential
inventory buildup, or higher operating costs.

         The  principal  products  that we sell are  commodities,  the prices of
which are quoted on  established  commodity  markets and are subject to volatile
changes.  Although the current market prices of these commodities are favorable,
a decline in these prices has the potential to adversely impact our liquidity. A
disruption in international sales, a decline in commodities prices, or a rise in
energy  prices,  resulting  from the  recent  war with  Iraq and the  subsequent
political instability and uncertainty, has the potential to adversely impact our
liquidity.  There can be no assurance  that a decline in commodities  prices,  a
rise in energy prices, a slowdown in the U.S. or international economy, or other
factors,  including the political  instability  in the Middle East or elsewhere,
and the macroeconomic effects of those events, will not cause us to fail to meet
management's expectations, or otherwise result in liquidity concerns.

Contractual Obligations and Other Commercial Commitments

         The  following  table  summarizes  our  expected  material  contractual
payment  obligations,  including both on- and off-balance sheet  arrangements at
March 29, 2003 (in thousands):


                                                                                  
                                                      Less Than        1 - 3         3 - 5       More than
                                          Total         1 Year         Years         Years        5 Years
                                      -------------- ------------- -------------- ------------- -------------
Contractual obligations:
   Debt                                   $62,616       $  8,033       $20,822       $33,761             -
   Operating lease obligations             20,298          3,646         5,404         2,264         8,984
   Purchase commitments                     3,386          3,386             -             -             -
   Other liabilities                        1,541          1,272            82            80           107
                                          -------        -------     ---------     ---------        ------
       Total                              $87,841        $16,337       $26,308       $36,105        $9,091
                                           ======         ======        ======        ======         =====


         Our   off-balance   sheet   contractual   obligations   and  commercial
commitments as of March 29, 2003 relate to operating lease obligations,  letters
of credit,  forward  purchase  agreements,  and employment  agreements.  We have
excluded  these  items from the  balance  sheet in  accordance  with  accounting
principles generally accepted in the United States of America.

         The  following  table  summarizes  our  other  commercial  commitments,
including  both on- and  off-balance  sheet  arrangements  at March 29, 2003 (in
thousands):


                 Other commercial commitments:
                   Standby letters of credit               $   8,950
                                                             -------
                 Total other commercial commitments:       $   8,950
                                                             =======

                                      -28-



Quantitative and Qualitative Disclosures About Market Risks

         Market risks  affecting  our company are exposures to changes in prices
of the finished  products we sell,  interest rates on debt,  availability of raw
material  supply and the price of natural gas used in our plants.  The amount of
raw  materials  available  to us are  impacted  by seasonal  factors,  including
holidays,  when raw material inage declines;  warm weather,  which can adversely
affect the quality of raw material processed and finished products produced; and
cold weather, which can impact the collection of raw material. Predominately all
of our  finished  products are  commodities  that are  generally  sold at prices
prevailing at the time of sale. We have used,  through June 2002,  interest rate
and,  through  March 2001,  natural  gas swaps to manage  these  related  risks.
Beginning in April 2001,  we are using natural gas forward  purchase  agreements
with  our  suppliers  to  manage  the  price  risk of  natural  gas  used in our
facilities.  We  operate  in  international  markets.   Political  and  economic
instability in some regions of the world may result, and could negatively impact
our business and financial condition.

         We were a party to two interest  rate swap  agreements  at December 29,
2001.  Under the terms of the swap  agreements,  the interest  obligation on $45
million of credit  agreement  floating-rate  debt was  exchanged  for fixed rate
contracts  which bear interest,  payable  quarterly.  One swap agreement for $25
million matured June 27, 2002, bore interest at 6.5925% and our receive rate was
based on the  three-month  LIBOR.  The second  swap  agreement  for $20  million
matured on June 27, 2002,  with a one-time option for the bank to cancel at June
27, 2001,  which the bank  declined to exercise,  bore interest at 9.17% and the
Company's receive rate was based on the base rate.

         As of March 29, 2003, we have forward purchase  agreements in place for
purchases of  approximately  $2.1 million of natural gas for the period of April
and May, 2003, which approximates 62% of our usage for this period.

Critical Accounting Policies

         We follow certain  significant  accounting  policies when preparing our
consolidated  financial  statements.  A complete  summary of these  policies  is
included in Note 1 of Notes to Consolidated Financial Statements.

         Certain of the policies  require our management to make significant and
subjective  estimates or assumptions  which may deviate from actual results.  In
particular, management makes estimates regarding the fair value of our reporting
units in assessing potential impairment of goodwill,  estimates regarding future
undiscounted cash flows from the future use of long-lived assets whenever events
or changes in  circumstances  indicate that the carrying  amount of a long-lived
asset may not be recoverable,  estimates  regarding the net realizable  value of
long-lived assets held for sale, estimates regarding pension expense,  estimates
of bad debts and estimates  regarding  self insured risks  including  insurance,
environmental and litigation contingencies.

         In assessing impairment of goodwill we use estimates and assumptions in
determining  the estimated fair value of our reporting  units.  In assessing the
impairment of long-lived  assets where there has been a change in  circumstances
indicating the carrying value of a long-lived  asset may not be recoverable,  we
have  estimated  future  undiscounted  net cash  flows from the use of the asset
based on actual  historical  results  and  expectations  about  future  economic
circumstances  including  future business  volume,  finished  product prices and
operating  costs.  The estimates of fair value of reporting  units and of future
net cash flows  from use of the asset  could  change if actual  prices and costs
differ  due to  industry  conditions  or other  factors  affecting  the level of
business volume or our performance. In assessing impairment of long-lived assets
held for sale, we have estimated the net  realizable  value of such assets based
on information from various external sources  regarding  possible selling prices
for such  assets.  The  estimate  of reserve for bad debts is based upon our bad
debt experience,  market  conditions,  aging of trade accounts  receivable,  and
interest  rates,  among other factors.  Pension  expense is based upon actuarial
estimates.  These estimates could change based on changes in market  conditions,
interest rates and other  factors.  In estimating  liabilities  for self insured
risks, we consider  information from outside  consultants and experts,  and past
historical experience, in projecting future costs expected to be incurred. These
estimates   could  change  if  future  events  are  different  than  assumed  by
management,  actual costs to settle the liabilities  differ from those estimated
and the circumstances associated with the self insured risks change.



                                      -29-



Recent Accounting Pronouncements

         Recently,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement  of  Financial  Accounting  Standards  No. 143,  Accounting  for Asset
Retirement  Obligations  (SFAS  143);  (SFAS 145  adopted  early,  insignificant
effect);  Statement of Financial  Accounting  Standards No. 146,  Accounting for
Costs  Associated with Exit or Disposal  Activities (SFAS 146); and Statement of
Financial Accounting Standards No. 148, Accounting for Stock-Based  Compensation
- Transition and Disclosure - an amendment of SFAS 123 (SFAS 148).

         In June  2001,  the FASB  issued  SFAS No.  143,  Accounting  for Asset
Retirement  Obligations.  SFAS 143  requires  us to record  the fair value of an
asset  retirement  obligation  as a liability in the period in which it incurs a
legal obligation  associated with the retirement of tangible  long-lived  assets
that result from the acquisition,  construction,  development, and/or normal use
of the assets. We also record a corresponding asset that is depreciated over the
life of the asset. Subsequent to the initial measurement of the asset retirement
obligation, the obligation will be adjusted at the end of each period to reflect
the passage of time and changes in the  estimated  future cash flows  underlying
the  obligation.  We are  required to adopt SFAS 143 on  December  29, 2002 (the
first day of Fiscal  2003).  The  adoption of SFAS 143 is not expected to have a
material effect on our financial statements.

         In June  2002,  the FASB  issued  SFAS No.  146,  Accounting  for Costs
Associated  with  Exit or  Disposal  Activities.  SFAS 146  addresses  financial
accounting and reporting for costs  associated with exit or disposal  activities
and  nullifies   Emerging  Issues  Task  Force  (EITF)  Issue  94-3,   Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity.  The  provisions of this  statement are effective for exit or disposal
activities that are initiated  after December 31, 2002,  with early  application
encouraged.  The adoption of SFAS 146 is not expected to have a material  effect
on our financial statements.

         In November 2002, the FASB issued  Interpretation  No. 45,  Guarantor's
Accounting  and  Disclosure  Requirements  of  Guarantees,   Including  Indirect
Guarantees of Indebtedness to Others,  an  interpretation of FASB Statements No.
5,  57,  and  107,  and  a  rescission  of  FASB  Interpretation  No.  34.  This
Interpretation  elaborates on the  disclosures  to be made by a guarantor in its
interim and annual financial  statements about its obligations  under guarantees
issued.  The  Interpretation  also  clarifies  that a  guarantor  is required to
recognize,  at inception of a guarantee,  a liability  for the fair value of the
obligation undertaken. The initial recognition and measurement provisions of the
Interpretation  are  applicable to guarantees  issued or modified after December
31,  2002,  and are not  expected  to have a  material  effect on our  financial
statements The disclosure requirements are effective for financial statements of
interim or annual periods ending after December 15, 2002.

         In  December  2002,  the FASB  issued  SFAS  No.  148,  Accounting  for
Stock-Based  Compensation  -  Transition  and  Disclosure,  an amendment of FASB
Statement No. 123. This Statement amends FASB Statement No. 123,  Accounting for
Stock-Based  Compensation,  to provide  alternative  methods of transition for a
voluntary change to the fair value method of accounting for stock-based employee
compensation.  In addition, this Statement amends the disclosure requirements of
Statement No. 123 to require  prominent  disclosures  in both annual and interim
financial statements.  Certain of the disclosure  modifications are required for
fiscal years ending after December 15, 2002 and are included in the notes to the
accompanying consolidated financial statements.

         In January 2003, the FASB issued  Interpretation No. 46,  Consolidation
of  Variable  Interest   Entities,   an  interpretation  of  ARB  No.  51.  This
Interpretation  addressed the consolidation by business  enterprises of variable
interest entities as defined in the Interpretation.  The Interpretation  applies
immediately to variable  interests in variable  interest  entities created after
January 31,  2003,  and to variable  interests  in  variable  interest  entities
obtained after January 31, 2003. The application of this  Interpretation  is not
expected  to  have  a  material   effect  on  our  financial   statements.   The
Interpretation requires certain disclosures in financial statements issued after
January 31, 2003,  if it is  reasonably  possible  that we will  consolidate  or
disclose  information about variable  interest entities when the  Interpretation
becomes effective.


                                      -30-





                                  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.

         Commencing  1998,  as part of an  overall  strategy  to  better  commit
financial  resources,  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.

         Due to unfavorable  market conditions  resulting from declining prices,
in Fiscal 2000, the Esteem Product division, a business dedicated to using newly
developed  technologies  to  produce  novel  products  from  established  supply
sources, was combined with our rendering operations. In November 1998, we made a
strategic  decision  to dispose of an  additional  segment,  Bakery  By-Products
Recycling,  a group which produced high quality bakery  by-products for the feed
industry.  The results of the Bakery  By-Products  Recycling  segment  have been
reported  separately  as  discontinued  operations.  See  Note  15 of  Notes  to
Consolidated Financial Statements for further information regarding discontinued
operations.  For the financial results of our business segments,  see Note 17 of
Notes to Consolidated Financial Statements.


                                      -31-



         Our net external sales from continuing  operations by operating segment
were as follows:



                                              Fiscal                   Fiscal                   Fiscal
                                               2002                     2001                     2000
                                      ------------------------ ----------------------- -------------------------
                                                                                     

         Continuing operations:
              Rendering               $177,234         67.6%   $181,315        74.6%   $171,966         75.0%
              Restaurant Services       85,002         32.4      61,649        25.4      57,307         25.0
                                      --------        ------   --------       ------   --------        ------
                Total                 $262,236        100.0%   $242,964       100.0%   $229,273        100.0%
                                      ========        ======   ========       ======   ========        ======



         Recent Events.  On May 28, 2003, we announced that we are exploring our
strategic  alternatives  to  enhance  shareholder  value  and  liquidity  at the
direction of our Board of Directors.  To assist in this process, we have engaged
BMO Nesbitt Burns, a Chicago-based investment banking firm, specializing in food
and agribusiness.


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.

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.

                                      -32-


         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
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.

                                      -33-



         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.

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.


                                      -34-


Employees and Labor Relations

         As of December  28,  2002,  we  employed  approximately  1,200  persons
full-time.  Approximately  45.9% of the total number of employees are covered by
collective  bargaining  agreements;  however, we have no national or multi-plant
union contracts.  Our management  believes that our relations with our employees
and their representatives are good. There can be no assurance, however, that new
agreements will be reached without union action or will be on terms satisfactory
to us.

Facilities

         Our corporate headquarters are located at 251 O'Connor Ridge Boulevard,
Suite 300,  Irving,  Texas in an office facility,  where we lease  approximately
20,000 square feet.

         Our 24  operating  facilities  consist  of 18  full  service  rendering
plants, 4 yellow grease/trap grease plants, 1 blending plant and 1 edible plant.
Except for 4 leased facilities,  we own all of these facilities. In addition, we
own or lease 22 transfer stations in the United States and 1 transfer station in
Canada  that  serve  as  collection  points  for  routing  raw  material  to the
processing  plants set forth below.  Some  locations  service a single  business
segment while others service both business segments.  The following is a listing
of our operating facilities by business segment:

LOCATION                DESCRIPTION
--------                -----------

Combined Rendering and Restaurant Services Business Segments
------------------------------------------------------------

Blue Earth, MN          Rendering/Yellow Grease
Boise, ID               Rendering/Yellow Grease
Collinsville, OK        Rendering/Yellow Grease
Dallas, TX              Rendering/Yellow Grease
Detroit, MI             Rendering/Yellow Grease/Trap
Fresno, CA              Rendering/Yellow Grease
Houston, TX             Rendering/Yellow Grease/Trap
Kansas City, KS         Rendering/Yellow Grease/Trap
Los Angeles, CA         Rendering/Yellow Grease/Trap
Newark, NJ              Rendering/Yellow Grease/Trap
San Francisco, CA *     Rendering/Yellow Grease/Trap
Sioux City, IA          Rendering/Yellow Grease
St. Louis, MO           Rendering/Yellow Grease/Trap
Tacoma, WA *            Rendering/Yellow Grease/Trap
Turlock, CA             Rendering/Yellow Grease

Rendering Business Segment
--------------------------
Coldwater, MI           Rendering
Omaha, NE               Rendering
Omaha, NE *             Blending
Omaha, NE               Edible Oils
Wahoo, NE               Rendering

Restaurant Services Business Segment
------------------------------------
Chicago, IL             Yellow Grease/Trap
Ft. Lauderdale, FL *    Yellow Grease/Trap
No. Las Vegas, NV       Yellow Grease/Trap
Tampa, FL               Yellow Grease/Trap

---------------------------

*   Property is leased.  Annual rent expense for these leased  properties in the
    aggregate was $0.5 million in fiscal 2002.

                                      -35-



Legal Proceedings

         Melvindale,  Michigan. A group of residents living near our Melvindale,
Michigan  plant  has filed  suit,  purportedly  on behalf of a class of  persons
similarly situated ("Melvindale I"). The class has been certified for injunctive
relief  only.  The court  declined to certify a damage  class but has  permitted
approximately 300 people to join the lawsuit as plaintiffs. The suit is based on
legal theories of trespass, nuisance and negligence and/or gross negligence, and
is pending in the United States  District Court,  Eastern  District of Michigan.
Plaintiffs allege that emissions to the air,  particularly  odor, from the plant
have reduced the value and enjoyment of  plaintiffs'  property,  and  plaintiffs
seek unspecified  compensatory  and exemplary  damages in an amount in excess of
$25,000  per  plaintiff  and  unspecified  injunctive  relief.  We are unable to
estimate our potential  liability,  if any, from this lawsuit. In a lawsuit with
similar  factual  allegations,  also pending in United  States  District  Court,
Eastern  District of Michigan,  the City of Melvindale has filed suit against us
based on legal  theories of  nuisance,  trespass,  negligence  and  violation of
Melvindale  nuisance  ordinances  seeking damages and declaratory and injunctive
relief. The court has dismissed the trespass counts in both lawsuits, and all of
the  damage  claims  in the  suit  filed  by the City of  Melvindale  have  been
dismissed.  The City of Melvindale now seeks unspecified  injunctive  relief. In
April,  2002, a group of residents  living near our Melvindale,  Michigan plant,
represented  by named  plaintiffs  not listed in the  Melvindale  I lawsuit  but
purportedly  on  behalf  of a class  of  persons  defined  similarly  to that in
Melvindale I, filed a suit ("Melvindale  II").  Plaintiffs in Melvindale II rely
on essentially the same legal theories and factual allegations as originally set
forth in Melvindale I. However,  the Melvindale II plaintiffs  purportedly  seek
only  damages in an amount of more than $25,000 and less than $75,000 per member
of the putative class and do not seek injunctive  relief. We removed  Melvindale
II, which was originally filed in the Circuit Court of Wayne County, Michigan to
the United  States  District  Court,  Eastern  District  of  Michigan  where the
Melvindale I and the City of  Melvindale  lawsuits  are pending.  On October 21,
2002, the  Melvindale II lawsuit was remanded to Wayne County Circuit Court.  No
action has been taken by the court with respect to class  certification.  We are
unable to estimate our potential liability, if any, from this lawsuit. We or our
predecessors  have operated a rendering  plant at the Melvindale  location since
1927 in a heavily industrialized area down river south of Detroit. We have taken
and are  taking  all  reasonable  steps  to  minimize  odor  emissions  from our
recycling processes and are defending the lawsuit vigorously.

         Long Island City,  New York.  We are a party to a lawsuit that seeks to
require an  environmental  cleanup at a property in Long Island  City,  New York
where we formerly  operated a rendering plant  (referred to as the "Site").  DMJ
Associates (DMJ), which holds a mortgage on the Site, has filed suit against us,
as a former owner of the Site, as well as others  including the present  tenants
and operators of the Site,  the owner of an abandoned  hazardous  waste disposal
site adjoining the Site (the "Disposal  Facility"),  and companies that disposed
of wastes at the Disposal  Facility  (the  "Generator  Defendants").  DMJ argues
that,  inter alia,  under federal law it is entitled to relief  directed to have
the  defendants  remediate  the  contamination.  DMJ seeks  both  equitable  and
monetary relief from all defendants for investigation, abatement and remediation
of the Site. DMJ has not yet provided information sufficient for us to ascertain
the magnitude or amount of DMJ's total claim nor our alleged share thereof. As a
result,  we are unable to estimate our  potential  liability,  if any, from this
lawsuit.  We do not  have  information  suggesting  that we  contributed  in any
material way to any  contamination  that may exist at the Site.  We are actively
defending  the suit and are awaiting a decision on a motion on summary  judgment
regarding the standing of the plaintiff.


         Sauget, Illinois. We have concluded a settlement agreement with Solutia
and Pharmacia to satisfy  claims for  remediation  costs in the pending  lawsuit
related to an environmental cleanup in or near Sauget,  Illinois,  and in return
have  received  an  indemnity  and hold  harmless  agreement  from  Solutia  and
Pharmacia for any claims from others for costs  related to the same  remediation
effort.  The  United  States had filed a  complaint  against  Monsanto  Chemical
Company,  Solutia,  Inc.,  Anheuser-Busch,  Inc.,  Union Electric,  and 14 other
defendants,  seeking to recover  cleanup  costs.  Monsanto  (which  merged  with
Pharmacia  and Upjohn,  Inc. in 2000 and is now known as Pharmacia  Corporation)
and Solutia in turn filed a third party complaint seeking  contribution from the
United States, several federal agencies, and six more companies,  in addition to
us. As potentially  responsible  parties  themselves,  Pharmacia and Solutia are
seeking  to  recover  unspecified  proportionate  shares  from each of the other
parties,  in addition to us, of an as yet  undetermined  total  cleanup  cost. A
subsidiary  of ours had  operated  an  inorganic  fertilizer  plant  in  Sauget,
Illinois  for a number of years  prior to  closing it in the  1960's.  We cannot
predict what, if any,  additional  remediation efforts might be necessary in the
Sauget,  Illinois  area,  or whether we might be made a party to any  litigation
related to such additional remediation.


                                      -36-


         Other Litigation. We are also a party to several other lawsuits, claims
and loss  contingencies  incidental  to our  business,  including  assertions by
certain  regulatory  agencies  related  to  air,  wastewater,  and  storm  water
discharges from our processing facilities.

         Self  Insured  Risks.  We purchase our workers  compensation,  auto and
general liability insurance on a retrospective basis. We estimate and accrue our
expected  ultimate costs related to claims occurring during each fiscal year and
carry this accrual as a reserve until these claims are paid by us.


         As a result of the matters  discussed  above, we have  established loss
reserves for insurance,  environmental and litigation matters. At March 29, 2003
and December 28, 2002, the reserve for insurance,  environmental  and litigation
contingencies  reflected  on the  balance  sheet in accrued  expenses  and other
non-current  liabilities,  was  approximately  $12.5 million and $14.0  million,
respectively.  Our  management  believes these  reserves for  contingencies  are
reasonable  and  sufficient  based upon  present  governmental  regulations  and
information  currently  available to management;  however,  we cannot assure you
that final costs related to these matters will not exceed current estimates.  We
believe that any additional liability relative to these lawsuits and claims that
may not be covered by insurance would not likely have a material  adverse effect
on our financial position,  although it could potentially have a material impact
on the results of operations in any one year.


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.

         Such rules and regulations  may influence our operating  results at one
or more facilities.

         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.


                                      -37-





                                 OUR MANAGEMENT


Executive Officers and Directors


         Our executive officers and directors, their ages and their positions as
of May 14, 2003, are as follows:  Our executive officers serve at the discretion
of the Board of Directors.


         
         
         Name                                         Age    Position
         ----                                         ---    --------
                                                      

         Randall C. Stuewe                            40     Chairman of the Board and Chief Executive Officer
         James A. Ransweiler                          59     President and Chief Operating Officer
         John O. Muse                                 54     Executive Vice President - Finance and Administration
         Neil Katchen                                 57     Executive Vice President - Operations
         Mitchell Kilanowski                          51     Executive Vice President - Marketing and Research
         Gilbert L. Gutierrez                         46     Senior Vice President - Business Development
         Joseph R. Weaver, Jr.                        56     General Counsel and Secretary
         O. Thomas Albrecht (1) (2) (3) (4) (5)       56     Director
         Fredric J. Klink (2) (3) (4) (5)             69     Director
         Charles Macaluso (1) (2) (3) (4) (5)         59     Director
         Richard A. Peterson (1) (2) (3) (4) (5)      61     Director

         
         ----------------

         (1)  Member of the audit committee

         (2)  Member of the compensation committee

         (3)  Member of the nominating committee

         (4)  Member of the search committee

         (5)  Member of the special committee

         Randall  C.  Stuewe  has  served as our  Chairman  and Chief  Executive
Officer since  February  2003.  From 1996 to 2002, Mr. Stuewe worked for ConAgra
Foods, Inc. as executive vice president and most recently as president of Gilroy
Foods.  Prior to serving at ConAgra Foods,  he spent twelve years in management,
sales and trading positions at Cargill, Inc.

         James A.  Ransweiler  has served as the President  and Chief  Operating
Officer of our company since August 1999. Mr. Ransweiler served as the President
of Darling  Rendering  from  October  1997 to August  1999.  From August 1986 to
October 1997, he served as Vice President of our Eastern Region,  except for the
period from  January  1989 to February  1990 when he served as Special  Projects
Coordinator.

         John O. Muse has served as our Executive  Vice  President - Finance and
Administration  since  February  2000.  From October 1997 to February  2000,  he
served as our Vice President and Chief Financial  Officer.  From 1994 to October
1997 he served as Vice President and General Manager at Consolidated  Nutrition,
L.C. Prior to serving at Consolidated Nutrition,  Mr. Muse was Vice President of
Premiere  Technologies,  a  wholly-owned  subsidiary  of  Archer-Daniels-Midland
Company.  Since  August  1998,  Mr. Muse has served on an advisory  board for FM
Global.

         Neil Katchen has served as Executive Vice President - Operations  since
November  2001.  Prior thereto he served as Vice President of our Eastern Region
beginning  in  October  1997 and served as General  Manager of our  Newark,  New
Jersey facility from January 1990 to October 1997.

         Mitchell  Kilanowski  has  served as our  Executive  Vice  President  -
Marketing and Research since January 1999.  From September 1997 to January 1999,
Mr.  Kilanowski  served as our Vice  President-Marketing.  From

                                      -38-





August 1986 to  September  1997 he served as Director  of Domestic  Sales.  From
March 1975 to August 1986 he served in customer sales and service.

         Gilbert L. Gutierrez has served as our Senior Vice President - Business
Development  since November 2001.  Prior thereto he served as General Manager of
our Los Angeles,  California  facility from June 1997 to November 2001. Prior to
serving as General Manager, he served as our Vice President - Human Resources.

         Joseph R.  Weaver,  Jr. has served as our General  Counsel  since March
1997 and as our  Secretary  since  April 1997.  From May 1994 to March 1997,  he
served as Secretary and General Counsel of AAF-McQuay, Inc. From January 1990 to
April 1994, Mr. Weaver served as Assistant General Counsel of AAF-McQuay,  Inc.,
then known as Snyder General Corporation.

         O. Thomas Albrecht was employed by the McDonald's Corporation from 1977
until his retirement in March 2001.  Most recently,  from 1995 until March 2001,
Mr. Albrecht served as a senior vice president and chief  purchasing  officer of
McDonald's  Corporation.  Mr.  Albrecht  has served as a director of our company
since May 2002.

         Fredric J. Klink has been a director of our  company  since April 1995.
Since  December  31,  2001,  Mr.  Klink has been "of counsel" at the law firm of
Dechert LLP.  Prior  thereto he was a partner at the law firm of Dechert LLP for
more than five years.  Mr.  Klink's  law  practice  concentrates  on mergers and
acquisitions,  securities,  and  international  work. He received his LL.B. from
Columbia Law School in 1960.

         Richard A.  Peterson  has been the  managing  principal  of  Peterson &
Associates,  a  firm  specializing  in  financial  restructuring  and  strategic
advisory services to management and directors of distressed companies, a firm he
founded in April 2001.  Prior thereto,  Mr. Peterson was a senior vice president
and  regional  manager in the managed  assets  department  of Bank One, NA, from
April 1999 until his retirement in April 2001. From the Fall of 1998 until April
1999, he was a first vice  president and regional  manager in the managed assets
department  of Bank  One,  N.A.;  and he held the same  position  with Bank One,
N.A.'s predecessor,  First National Bank of Chicago, from 1995 until the Fall of
1998.  He was  employed by First  National  Bank of Chicago from October 1981 to
1995 in various  capacities  in the  "workout  and  turnaround"  group for large
corporate  credits.  Mr.  Peterson has served as a director of our company since
May 2002.

         Charles  Macaluso has been a principal of  Dorchester  Capital,  LLC, a
management   consulting  and  corporate   advisory   service  firm  focusing  on
operational assessment,  strategic planning and workouts,  since 1998. From 1996
to 1998,  he was a partner at Miller  Associates,  Inc.,  a workout,  turnaround
partnership  focusing on operational  assessment,  strategic planning and crisis
management.  Mr. Macaluso is currently a director of Elder-Beerman  Stores Corp.
(NASDAQ:  EBSC), where he serves as Chairman of the Strategic Planning Committee
and serves on the Audit and Finance  Committee  and also serves as a director of
Flag Telecom,  Ltd. and is a member of the audit  committee.  Mr.  Macaluso also
serves as a director of the following companies: Crescent Public Telephone, Inc.
(chairman),  Prime Succession,  Inc. (chairman),  and Lazy Days RV Centers, Inc.
Mr. Macaluso has served as a director of our company since May 2002.



                                      -39-



Director Compensation

         Prior  to  October  1,  2002,  non-employee  members  of the  Board  of
Directors were paid a $25,000 annual retainer.  Each outside  director  received
$1,500 for each board meeting or $1,000 for each  committee  meeting  personally
attended,  or $500 if a committee  meeting was attended  before or after a board
meeting,  and $750 for each board or committee  meeting  attended by  telephone.
Effective  October 1, 2002, the annual retainer became $35,000.  The chairman of
the audit,  compensation,  nominating  and  special  committee  each  receive an
additional $5,000 annual retainer. The chairman of the search committee received
a one-time  $10,000 fee for 2002.  Also effective  October 1, 2002, each outside
director  receives $1,500 for each board or committee meeting attended in person
or by video where minutes are taken, or $1,000 if attended by telephone.

         Under the  Non-Employee  Directors Stock Option Plan,  prior to May 17,
2000,  each outside  director was granted an option to purchase 15,000 shares of
our  common  stock on the tenth  business  day of July 1995 and was  granted  an
identical option on the tenth business day of July of each year thereafter. Each
outside  director elected after July 1995 but prior to May 17, 2000, was granted
an option to purchase  21,000 shares of our common stock on the day he was first
elected by our  stockholders as a member of the Board of Directors.  Pursuant to
an amendment to the Non-Employee  Directors Stock Option Plan adopted on May 17,
2000, each outside  director elected on or after May 17, 2000 is granted options
to buy 4,000 shares of our common stock when he is first elected to the Board of
Directors by our  stockholders.  On the date of each calendar year thereafter on
which our  independent  auditors  sign their  annual  audit  report,  options to
purchase  4,000  shares of our common stock are granted  under the  Non-Employee
Directors  Stock Option Plan to each of our outside  directors,  but such grants
occur only if we obtain 90% of our target  EBITDA for our most recent  completed
fiscal  year.  The per share  exercise  price of each option  granted  under the
Non-Employee  Directors  Stock Option Plan is equal to the fair market value per
share of our common stock on the date of grant of the options relating  thereto.
Twenty-five  percent of the shares  subject to each option vest on the date that
is six months  following the date of grant and 25% of the shares vest on each of
the  first,  second  and third  anniversaries  of the date of grant  thereafter.
Options to purchase an  aggregate  of 450,000  shares of our common stock may be
granted under the Non-Employee Directors Stock Option Plan.

         If while unexercised  options remain outstanding under the Non-Employee
Directors  Stock Option Plan,  any of the following  events  occur,  all options
granted under the Non-Employee Directors Stock Option Plan become exercisable in
full, whether or not they are otherwise exercisable:

         o    any  entity  other  than us makes a tender or  exchange  offer for
              shares of our common stock pursuant to which purchases are made,

         o    our  stockholders  approve  a  definitive  agreement  to  merge or
              consolidate  our company  with or into another  corporation  or to
              sell all or  substantially  all of our  assets  or adopt a plan of
              liquidation,

         o    the beneficial ownership of securities  representing more than 15%
              of the  combined  voting  power of our  company is acquired by any
              person, or

         o    during any period of two consecutive years, the individuals who at
              the start of such  period were  members of the Board of  Directors
              cease  to  constitute  at least a  majority  thereof,  unless  the
              election of each new  director  was approved by a vote of at least
              two-thirds  of  the  directors  then  still  in  office  who  were
              directors at the start of such period.



                                      -40-



         In the case of a merger where we are the surviving  entity and in which
there is a reclassification of the shares of our common stock, each option shall
become  exercisable  for the  kind  and  amount  of  shares  of  stock  or other
securities receivable upon such reclassification or merger. Upon consummation of
the Recapitalization in May 2002, all then outstanding options granted under the
Non-Employee  Directors Stock Option Plan became exercisable in full, whether or
not they were otherwise exercisable.

         On March 15,  2002,  each  outside  director  as of such date  (Messrs.
Colonnetta,  Klink, Longmire and Waterfall) was granted 4,000 options with a per
share exercise price of $0.56 under the Non-Employee Directors Stock Option Plan
because we achieved in excess of 90% of our targeted  EBITDA for the fiscal year
ended  December 29, 2001.  The per share  exercise  price of each option granted
under the  Non-Employee  Directors Stock Option Plan is equal to the fair market
value per share of our common stock on the date of grant of the options relating
thereto. On May 10, 2002, each of Messrs. Albrecht,  Macaluso and Peterson, upon
his election to our Board of  Directors  was granted  options to purchase  4,000
shares of our common stock with a per share  exercise  price of $0.80 per share.
In total,  28,000  options were granted under the  Non-Employee  Directors  Plan
during the fiscal year ended December 28, 2002.

         On March 26,  2003,  each  outside  director  as of such date  (Messrs.
Albrecht,  Klink,  Macaluso and  Peterson)  was granted 4,000 options with a per
share exercise price of $1.99 under the Non-Employee Directors Stock Option Plan
because we achieved in excess of 90% of our targeted  EBITDA for the fiscal year
ended December 28, 2002.


                                      -41-




Executive Compensation

         The  following  table sets forth  certain  information  with respect to
annual and  long-term  compensation  for services in all  capacities  for fiscal
years  2002,  2001 and 2000 paid to our five most highly  compensated  executive
officers who were serving as such at December 28, 2002.




                                               Summary Compensation Table
                                                                                        Long-Term
                                                    Annual Compensation                Compensation
                                                                                       ------------
                                                                                        Number of
                                                                                        Securities
               Name and                                                                 Underlying         All Other
          Principal Position                Year         Salary          Bonus            Options        Compensation
          ------------------                ----         ------          -----          -----------      ------------
                                                                                          

Denis J. Taura                              2002        $210,000          --               --              $805,815(4)
   Chairman and Chief Executive             2001         700,000(2)       --               --                 --
     Officer (1)                            2000         520,000(3)       --          1,080,000(6)           13,200(5)

James A. Ransweiler                         2002         335,000        $91,106            --                 --
   President and Chief Operating            2001         307,500         30,000          90,000(7)            --
     Officer                                2000         300,000                           --                 --

John Muse                                   2002         252,788         54,844            --                 --
   Executive Vice President -               2001         216,924         20,000          45,000(7)            --
     Finance and Administration             2000         197,693          --               --                 --

Neil Katchen                                2002         220,000         71,250            --                 --
   Executive Vice President -               2001         200,000         20,000          73,800(7)            --
     Operations                             2000         195,000          --               --                 --

Mitchell Kilanowski                         2002         180,000         23,911            --                 --
   Executive Vice President -               2001         164,000         10,000          45,000(7)            --
     Marketing and Research                 2000         160,000          --               --                 --



     (1)  Mr.  Taura  resigned  as  Chairman  and Chief  Executive  Officer of our  company on February 3, 2003 and was
          replaced on such date by Mr. Stuewe.  Mr. Taura continued to serve as a director of our company until May 13,
          2003.


    (2)   Of this amount,  $180,000  represents  additional  salary paid to Mr.  Taura as  compensation  for  extensive
          additional time spent on company matters during fiscal 2001.

    (3)   Of this amount, $130,000 represents compensation paid to Taura Flynn & Associates, LLC, of which Mr. Taura is
          a principal,  for  services  provided to our company by Mr. Taura as Chief  Executive  Officer  pursuant to a
          loan-out agreement.  Effective March 15, 2000, Mr. Taura became an employee of our company. Mr. Taura did not
          participate in any of our employee benefit plans.

    (4)   Of this amount,  $346,667 represents severance payments as described below under "Employment  Agreements" and
          $459,148  represents  consulting  fees paid to Taura Flynn & Associates  LLC.  Upon the  consummation  of the
          Recapitalization  effective as of May 10, 2002, Mr. Taura was retained as a consultant to our company and the
          remaining  portion of Mr.  Taura's  salary for 2002 was paid to Taura Flynn &  Associates,  LLC, of which Mr.
          Taura is a principal,  for services  provided to our company by Mr. Taura as Chief Executive Officer pursuant
          to a consulting  agreement.  Mr. Taura's entry into the consulting agreement was a condition precedent to the
          consummation of the Recapitalization Agreement.

    (5)   $13,200 represents payments of management  consulting fees and expenses to Taura Flynn & Associates,  LLC, of
          which Mr. Taura is a principal, for services provided to us.

    (6)   Amount  represents  (i) options to purchase  540,000  shares of our common stock  granted  March 15, 2000 and
          ratified by  shareholders  on May 17,  2000;  and (ii)  options  granted on December  13, 2000 to purchase an
          additional 540,000 shares of our common stock.

    (7)   On May 16, 2001, our stockholders  authorized the Board of Directors to grant under the 1994 Plan on or after
          June 4, 2001 options to purchase 735,355 shares of our common stock at 100% of fair market value on such date
          to key employees who surrendered an equal number of options on December 1, 2000. On June 5, 2001,  options to
          purchase 703,385 shares of our common stock were issued to such key employees at $0.50 per share.


                                                         -42-


Option Grants

         No options were granted by us to any of the executive officers named in
the summary  compensation  table above during the fiscal year ended December 28,
2002. Upon Randall Stuewe's  appointment as Chairman and Chief Executive Officer
effective February 3, 2003, Messr. Stuewe was issued options under the 1994 Plan
to purchase 250,000 shares of our common stock at $1.96 per share.

Option Exercises and Year-End Options Values

         The  following  table sets forth  certain  information  with respect to
options  exercised during the fiscal year ended December 28, 2002 by each of the
executive  officers named in the summary  compensation table above and the value
of unexercised options held by such executive officers at December 28, 2002:




                              Options Exercised in
                                   Fiscal 2002                 Number of Securities           Value of Unexercised In-
                         ------------------------------      Underlying Unexercised             the-Money Options at
                             Shares                       Options at December 28, 2002            December 28, 2002
                           Acquired on      Value                 Exercisable (E)                  Exercisable (E)
                            Exercise       Realized              Unexercisable (U)               Unexercisable (U)(1)
                           -----------     --------        ----------------------------        -----------------------
                                                                                   

Denis J. Taura                 --              --                 1,206,000(E)                      $675,000(E)
                                                                          0(U)                             0(U)
James A. Ransweiler            --              --                   200,832(E)                        45,000(E)
                                                                     54,000(U)                        67,500(U)
John O. Muse                   --              --                    18,000(E)                        22,500(E)
                                                                     27,000(U)                        33,750(U)
Neil Katchen                   --              --                    29,520(E)                        36,900(E)
                                                                     44,280(U)                        55,350(U)
Mitchell Kilanowski            --              --                    18,000(E)                        22,500(E)
                                                                     27,000(U)                        33,750(U)

    (1)  Based on the  difference  between the closing price of our common stock
         on December  28, 2002 ($1.75 per share) and the  exercise  price of the
         option.



                                      -43-



Employment Agreements

         We have entered into an  employment  agreement  dated as of February 3,
2003 with Mr. Stuewe, our Chairman and Chief Executive  Officer.  The employment
is for an interim  term of not less than four and not more than nine months from
the date of the  agreement.  Unless we notify Mr. Stuewe that the interim period
has  been  terminated  and that the term  shall  not  commence,  the term of the
employment agreement will commence at the end of the interim period and continue
for a period of three  years,  subject  to  extension  for  successive  one-year
periods thereafter unless terminated by not less than six months prior notice by
either us or Mr. Stuewe and termination  with or without cause as defined in the
agreement.

         Mr. Stuewe is employed as our Chairman and Chief Executive  Officer and
serves as a member of our Board of Directors.  The employment agreement provides
for an annual  base  salary of  $400,000,  subject  to annual  increases  at the
discretion  of  the  compensation  committee  of our  Board  of  Directors.  The
agreement  also provides for Mr. Stuewe to receive our standard  retirement  and
welfare benefits for executive officers.  Mr. Stuewe's employment agreement also
includes a severance agreement as described below.

         On February 3, 2003, the effective date of the employment agreement, we
granted Mr. Stuewe stock options to purchase  250,000 shares of our common stock
at $1.96 per share (an exercise  price equal to 100% of the fair market value of
our common stock on the effective  date)  pursuant to the terms of our 1994 Plan
and an  individual  stock option  agreement  between Mr.  Stuewe and us.  62,500
options  became  exercisable  on  February  3, 2003 and  62,500  options  become
exercisable on each of the first three anniversary dates of the grant.

         In addition,  at the commencement of the term (following the expiration
of the interim term) the employment agreement provides that we will grant to Mr.
Stuewe 250,000  additional  options at an option exercise price equal to 100% of
the fair market  value of our common  stock on the date of  commencement  of the
term,  pursuant to the terms of the 1994 Plan and of an individual  stock option
agreement  between Mr.  Stuewe and us.  62,500  options will become  exercisable
immediately  and 62,500  options  become  exercisable on each of the first three
anniversary dates of the grant.

         During the employment period, Mr. Stuewe is entitled to receive a bonus
in an amount equal to 60% or greater of Mr.  Stuewe's  then base salary (but not
in excess of Mr.  Stuewe's  base salary) based upon the  relationship  of actual
"EBITDA" (as defined in the employment  agreement) for a fiscal year to budgeted
EBITDA as established by the Board of Directors for such fiscal year.

         We  have  entered  into  severance  agreements  with  Messrs.   Stuewe,
Ransweiler,  Muse,  Katchen and  Kilanowski  which  provide,  subject to certain
conditions,  for severance  compensation equal to one year's compensation to the
officer  (except that in Mr.  Stuewe's  case,  during the interim term only,  as
defined  in his  employment  agreement,  severance  compensation  is  limited to
$75,000 plus,  depending upon the date of  termination,  a portion of one year's
compensation) in the event of a termination of the officer's  employment  unless
such  termination is voluntary or based upon cause as defined in the agreements.
The  Recapitalization  constituted  a change of  control  under the terms of Mr.
Taura's  severance  agreement,  which  provided  for  payment  of two years base
compensation.  Pursuant to an  amendment  to the  severance  agreement  that was
entered into as a condition precedent to closing of the  Recapitalization,  such
payments are payable in twenty-four  equal monthly  installments,  commencing on
May 13, 2002;  provided,  that when Mr. Taura ceases to be a member of our Board
of  Directors  the  balance of his  severance  will become  immediately  due and
payable.


                                      -44-


Stock Option Plans

         1993 Plan. The Board of Directors has suspended the 1993 Flexible Stock
Option Plan and no further  options are to be issued  under such plan.  Officers
and other key  employees of Darling were  eligible to receive  options under the
1993 Plan. In December 1993, we granted options covering 1,483,500 shares of our
common stock to seven members of our  management  pursuant to the 1993 Plan. The
exercise price of these options is $2.857 per share. These options vested 20% on
the date of grant and vest 20% on each  anniversary  date  thereof.  All options
under the 1993 Plan have fully vested.  The options granted pursuant to the 1993
Plan  are  intended  to  be  incentive  stock  options  to  the  maximum  extent
permissible under the Internal Revenue Code of 1986, as amended and nonqualified
stock options to the extent not incentive  stock options.  184,066 of the shares
covered  by  these  options  were  transferred  to the  1994  Plan  prior to the
three-for-one  stock  split,  pursuant  to  shareholder  approval  at the annual
meeting of stockholders held May 20, 1997.

         1994 Plan. Our compensation  committee may grant options under the 1994
Employee  Flexible  Stock  Option Plan to officers  and other key  employees  of
Darling.  The  purpose  of the 1994  Plan is to  attract,  retain  and  motivate
officers and key employees,  and to encourage them to have a financial  interest
in our company.  In 1994,  500,000 options,  each to buy one share of our common
stock, were authorized for the 1994 Plan and pursuant to stockholder approval at
the annual meeting of stockholder held May 20, 1997,  184,066 options  forfeited
or canceled under the 1993 Plan were authorized as additional  options available
for grant under the 1994 Plan. Therefore,  after the effect of the three-for-one
stock split,  a total of 2,052,198  options were  authorized to be granted under
the 1994  Plan.  Pursuant  to  stockholder  approval  at the  annual  meeting of
stockholders held May 27, 1998,  500,000  additional options were authorized for
the 1994 Plan bringing the total authorized to be granted under the 1994 Plan to
2,552,198  options.  Pursuant to  stockholder  approval at the annual meeting of
stockholders  held May 17, 2000, the number of authorized  shares under the 1994
Plan was reduced from 2,552,198 to 2,012,198 shares. Options granted pursuant to
the  1994  Plan  typically  vest  20% on the  date  of  grant  and  20% on  each
anniversary date thereof.  Pursuant to the  acceleration  provisions of the 1994
Plan relating to change of control, upon consummation of the Recapitalization in
May 2002,  all then  outstanding  options  granted  under  the 1994 Plan  became
exercisable in full, whether or not they were otherwise exercisable, except that
the options granted on June 5, 2001, as described below, did not accelerate upon
consummation of the Recapitalization.

         Under the 1994 Plan, stock options are awarded based on an individual's
level of  responsibility  within his or her area,  such  individual's  executive
development  potential and competitive  market norms.  Options granted under the
1994 Plan are granted at 100% of the fair market  value of the stock on the date
of grant.

         On May 16, 2001, our stockholders  authorized the Board of Directors to
grant under the 1994 Plan on or after June 4, 2001  options to purchase  735,355
shares  of our  common  stock at 100% of fair  market  value on such date to key
employees  who  surrendered  an equal number of options on December 1, 2000.  On
June 5, 2001, options to purchase 703,385 shares of our common stock were issued
to such key employees at $0.50 per share.

         During fiscal 2002,  no options to purchase  shares of our common stock
were granted under the 1994 Plan.

         Non-Employee  Directors  Stock Option Plan.  For a  description  of the
Non-Employee  Directors  Stock Option Plan,  see the  disclosure set forth above
under "Director Compensation."

                                      -45-


Equity Compensation Plans

         The following  table sets forth certain  information as of December 28,
2002  with  respect  to our  equity  compensation  plans  (including  individual
compensation  arrangements) under which our equity securities are authorized for
issuance,  aggregated by (i) all compensation  plans previously  approved by our
security holders, and (ii) all compensation plans not previously approved by our
security holders. The table includes:

         o    the  number  of  securities  to be  issued  upon the  exercise  of
              outstanding options;

         o    the  weighted-average  exercise price of the outstanding  options,
              and

         o    the number of securities that remain available for future issuance
              under the plans.




                                          Number of securities
                                            to be issued upon                                   Number of securities
                                               exercise of       Weighted-average exercise       remaining available
                                               outstanding          price of outstanding         for future issuance
                                            options, warrants        options, warrants              under equity
Plan Category                                  and rights                and rights              compensation plans
-------------------------------------   ----------------------   -------------------------      ---------------------
                                                                                       

Equity compensation plans approved by
  security holders                            2,917,165 (1)                   $1.93                    802,373

Equity compensation plans not approved
  by security holders                                 0                         -                            0
                                              -------------                   -----                    -------

Total                                         2,917,165                       $1.93                    802,373

     (1) Includes (i) shares  underlying  options that may be issued pursuant to
         the 1993 Plan, the 1994 Plan and the Non-Employee Director Stock Option
         Plan,  all  of  which  plans  have  been  previously  approved  by  our
         stockholders, (ii) 540,000 shares underlying options that may be issued
         outside of the 1994 Plan under an option  agreement with Mr. Taura that
         was previously approved by our stockholders and (iii) shares underlying
         Former  Class A  Options  that  have been  previously  approved  by our
         stockholders.



Annual Incentive Plan

         Our annual incentive plan is administered by our compensation committee
and provides  incentive  cash bonuses to corporate and regional  executives.  In
fiscal 2002, the annual incentive plan was tied to plan components  comprised of
actual levels achieved for EBITDA,  collection/service charge revenue, operating
expenses,  safety goals,  raw material  procurement and individual  initiatives.
Incentive  earned under each component is calculated  independently of the other
components and is expressed in terms of a percentage of base salary.


                                      -46-




Pension Plan Table

         The following table illustrates the approximate annual pension that the
executive officers named in the summary compensation table above (other than Mr.
Taura) would receive under the Salaried  Employee's  Retirement Plan if the plan
remains  in effect  and such  executive  officers  retired  at age 65.  However,
because  of  changes  in the tax laws or  future  adjustments  to  benefit  plan
provisions,  actual pension benefits could differ significantly from the amounts
set forth in the table.



                                                              Estimated Annual Pension
                               ---------------------------------------------------------------------------------------
                                                                 (Years of Service)
Average Annual Salary During
      the Last 5 Years               15                20                 25                 30              35
------------------------------ ---------------- ------------------ ------------------ ----------------- --------------
                                                                                         

          $150,000                 $40,500           $54,000           $ 67,500           $ 71,250         $ 75,000
           175,000                  47,250            63,000             78,750             83,125           87,500
           200,000                  54,000            72,000             90,000             95,000          100,000
           235,840                  63,677            84,902            106,128            112,024          117,920



         The above amounts do not reflect the compensation limitations for plans
qualified under the Internal Revenue Code,  effective January 1, 1994. Effective
January 1, 2002, annual  compensation in excess of $200,000  ($235,840 for 1993)
is not taken into account when  calculating  benefits under the Retirement Plan.
Such limitation will not, however, operate to reduce plan benefits accrued as of
December 31, 1993.

         If the executive officers named in the summary compensation table above
(other than Mr. Taura) remain  employees of our company until they reach age 65,
the years of credited service for Messrs. Stuewe, Ransweiler,  Muse, Katchen and
Kilanowski will be as follows: Stuewe, 25 years; Ransweiler,  24 years; Muse, 16
years; Katchen, 40 years; and Kilanowski, 40 years.

         The Retirement Plan is a non-contributory  defined benefit plan. Office
and supervisory employees,  not covered under another plan, automatically become
participants  in the  plan on the  earlier  of  January  1 or  July 1  following
completion of 1,000 hours of service in a consecutive  twelve-month period. Upon
meeting the eligibility  requirement,  employees are recognized as a participant
from the  date of  commencement  of their  service  with our  company.  Eligible
employees  become fully vested in their benefits after  completing five years of
service.  Benefits under the plan are calculated on "average  monthly pay" based
upon the highest 60 consecutive  months of the latest 120 months (and subject to
the limitations discussed above) and the years of service completed.

         The basic  pension  benefit is equal to 45% of the  employee's  average
monthly pay, reduced proportionally for years of service less than 25 years. The
multiple is  increased  0.5% per year for years of service in excess of 25 years
to a maximum of 15 additional years.


                                       -47-



                      REPORT OF THE COMPENSATION COMMITTEE

         The following report of the compensation  committee and the performance
graph  that  appears  immediately  after such  report  shall not be deemed to be
soliciting  material or to be filed with the Securities and Exchange  Commission
under  the  Securities  Act of 1933 or the  Securities  Exchange  Act of 1934 or
incorporated by reference in any document so filed.

         Our executive  compensation  program is designed to attract,  motivate,
reward  and  retain  the  executive  officers  needed to  achieve  our  business
objectives,   to  increase  our  profitability  and  to  provide  value  to  our
stockholders.  The  program  has been  structured  and  implemented  to  provide
competitive  compensation  opportunities  and various  incentive awards based on
company  and  individual  performance.  Our  executive  compensation  program is
composed of three principal components: base salary, short term incentive awards
and long term incentive awards.

Base Salaries

         The  base  salaries  of our  five  most  highly  compensated  executive
officers  who were  serving as such at  December  28,  2002 are set forth in the
summary  compensation  table located  above.  The base salary of Mr. Taura,  our
former Chairman and Chief Executive Officer, was established and reviewed by the
compensation committee. Executive positions are grouped by grades which are part
of  our  company's  overall  salary  structure.  The  base  salaries  of  senior
executives,  except those established by employment agreements,  are reviewed to
determine if adjustment is necessary based on competitive practices and economic
conditions.  Salaries  are adjusted  within  grade  ranges  based on  individual
performance and changes in job content and responsibilities.

Short Term Incentive Awards

         The  short-term  program,  or Annual  Incentive  Plan,  consists  of an
opportunity  for the award of an annual  incentive cash bonus in addition to the
payment of base salary.  In 2002,  our Annual  Incentive  Plan for corporate and
division  executives  was tied to plan  components  comprised  of actual  levels
achieved for EBITDA,  collection/service  charge  revenue,  operating  expenses,
safety goals,  raw material  procurement and individual  initiatives.  Incentive
earned under each component is calculated  independently of the other components
and is expressed in terms of a percentage of base salary.

         In fiscal 2002, our company met the predetermined threshold established
for the payment of cash incentive  awards to all employees  participating in the
Annual Incentive Plan. Under the Annual  Incentive Plan,  senior  executives are
entitled  to  receive  annual  bonuses  of up to 60%  of  their  base  salaries.
Additionally,  for fiscal 2002,  our company paid  certain  other  discretionary
bonuses outside the Annual Incentive Plan.


                                      -48-




Long Term Incentive Awards

         In connection with a financial restructuring of our company consummated
in December 1993,  long term incentive  awards in the form of stock options were
granted to  certain of our  executive  officers  under the 1993 Plan.  In fiscal
1997, the Board of Directors  suspended the 1993 Plan and no further options are
to be issued under such plan.

         Under the 1994 Plan, stock options are awarded based on an individual's
level of  responsibility  within his or her area,  such  individual's  executive
development  potential and competitive  market norms.  Options granted under the
1994 Plan are granted at 100% of the fair market  value of the stock on the date
of grant.

                                       Fredric J. Klink
                                       O. Thomas Albrecht
                                       Charles Macaluso
                                       Richard A. Peterson


                                      -49-





                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT


         Section  16(a)  of the  Securities  Exchange  Act of 1934,  as  amended
requires our directors and executive  officers and any persons who own more than
ten  percent  of our  common  stock to file  with the  Securities  and  Exchange
Commission  various  reports as to ownership of such common stock.  Such persons
are required by Securities and Exchange Commission regulation to furnish us with
copies of all Section 16(a) forms they file. To our  knowledge,  based solely on
our review of the copies of such reports  furnished to us, the aforesaid Section
16(a) filing requirements were met on a timely basis during 2002.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Mr.  Taura  served as our  Chairman  of the  Board and Chief  Executive
Officer  from  August  1999 to  February  2003.  Mr.  Taura is a partner  in the
management  consulting  firm Taura Flynn & Associates,  LLC.  Prior to Mr. Taura
becoming  our  employee,  he  served  as our  Chairman  of the  Board  and Chief
Executive Officer pursuant to an agreement between Taura, Flynn & Associates and
us.  Upon  consummation  of the  Recapitalization  in May  2002,  Mr.  Taura was
retained as a consultant  to serve as our Chairman and Chief  Executive  Officer
pursuant to an agreement  between  Taura,  Flynn & Associates and us. Instead of
paying Mr. Taura as a salaried  employee  during the  remainder of 2002,  Taura,
Flynn & Associates  was paid an  equivalent  amount for his  services.  See "Our
Management--Executive  Compensation" above for information regarding the amounts
paid to Mr. Taura and to Taura Flynn & Associates during fiscal 2002.

         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. We paid  Dechert LLP $463,631  during  fiscal 2002 for the  performance  of
various legal services.

                                PERFORMANCE GRAPH

         Set forth below is a line graph  comparing the change in the cumulative
total stockholder return on our company's common stock with the cumulative total
return of the AMEX Stock Market - U.S. Index, the Dow Jones Industrial Pollution
Control/Waste  Management Index, and the CSFB-Nelson  Agribusiness Index for the
period from  January 3, 1998 to December 28, 2002,  assuming the  investment  of
$100 on January 3, 1998 and the reinvestment of dividends.

         The stock price performance shown on the graph only reflects the change
in  our  company's  stock  price  relative  to  the  noted  indices  and  is not
necessarily indicative of future price performance.


                                      -50-






                                          COMPARISON OF CUMULATIVE TOTAL RETURN
                                                   DARLING COMMON STOCK
                                                 AMEX STOCK MARKET- U.S.
                              DOW JONES INDUSTRIAL POLLUTION CONTROL/WASTE MANAGEMENT INDEX
                                              CSFB-NELSON AGRIBUSINESS INDEX




                                                     [GRAPH OMITTED]


----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
                                       Jan. 3,        Jan. 2,       Jan. 1,      Dec. 30,      Dec. 29,      Dec. 28,
                                         1998           1999          2000         2000          2001          2002
----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
                                                                                          

Darling International Inc.              100             36.03         25.00         4.41          7.65         20.59

----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
Dow Jones Industrial Pollution
Control/Waste Management Index          100            105.26         58.46        82.14         93.56         71.74

----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
CSFB - Agribusiness Index               100            103.02         86.74       105.91        127.46        114.41

----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------
AMEX Stock Market - US                  100            107.75        142.17       131.86        124.20        100.19

----------------------------------- --------------- ------------- ------------- ------------ -------------- ------------


                                                           -51-



         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

         The  following  table  and notes set  forth  certain  information  with
respect to the beneficial  ownership of shares of our common stock,  as of March
25,  2003,  by each  person or group  within the meaning of Rule 13d-3 under the
Exchange Act who is known to our management to be the  beneficial  owner of more
than five percent of our outstanding  common stock and is based upon information
provided to us by such persons.



                                                                                Amount and
                                                                                 Nature of
                                                                                Beneficial              Percent
Name and Address of Beneficial Owner                                           Ownership (1)            of Class
------------------------------------                                           -------------            --------
                                                                                                  

Phoenix Partners................................................                     6,374                 *
Betje Partners..................................................                     2,278                 *
Phaeton B.V.I...................................................                     4,532                 *
Morgens Waterfall Income Partners...............................                   233,187                 *
Morgens, Waterfall, Vintiadis & Company, Inc....................                     6,810(2)              *
Restart Partners L.P............................................                   884,193                  1.4%
Restart Partners II, L.P........................................                 1,746,980                  2.8%
Restart Partners III, L.P.......................................                 1,445,937                  2.3%
Restart Partners IV, L.P........................................                   900,369                  1.5%
Restart Partners V, L.P.........................................                   150,000                 *
MWV Employee Retirement Plan Group Trust........................                     1,648                 *
Endowment Restart, L.L.C........................................                 1,080,975                  1.7%
Edwin H. Morgens................................................                 6,454,825(3)              10.3%
Bruce Waterfall ................................................                 6,454,825(4)              10.3%
(collectively, the "Morgens, Waterfall Group")..................
Morgens, Waterfall Group (5)....................................                 6,456,473(6)              10.3%

Credit Lyonnais New York Branch (7).............................                 4,359,141                  7.0%
Daple, S.A. / PPM America Special Investments CBO II, L.P. /                    17,902,607                 28.8%
     PPM America Special Investments Fund, L.P. (8) ............
Bank One N.A. (9)...............................................                 6,434,923                 10.3%
Cerberus Partners, L.P. (10)....................................                 8,355,849                 13.4%
Avenue Special Situations Fund II L.P. (11).....................                 6,538,530                 10.5%

------------------------------

*      Less than 1%

(1)    Except as  otherwise  indicated  in footnotes 2, 3, 4 and 6, the entities
       named in this table have sole voting and investment power with respect to
       all shares of capital stock shown as beneficially owned by them.

(2)    Morgens Waterfall Vintiadis & Company,  Inc. does not directly own any of
       the common stock or options  described in footnote 6 but may be deemed to
       indirectly  beneficially  own 6,810 shares of our common stock,  assuming
       exercise of the options,  by virtue of contracts with Phaeton B.V.I.  and
       Betje Partners pursuant to which Morgens  Waterfall  Vintiadis & Company,
       Inc. provides investment advisory services.

(3)    Edwin H. Morgens does not have direct beneficial  ownership of the common
       stock or options  described  in footnote 6. Mr.  Morgens may be deemed to
       indirectly  beneficially  own  6,454,825  shares  of  our  common  stock,
       assuming exercise of the options described in the second to last sentence
       of footnote 6, by virtue of his  positions as managing  member of each of
       MW Management, L.L.C., MW Capital, L.L.C. and Endowment Prime, L.L.C., as
       general  partners  of  Phoenix  Partners  and  Morgens  Waterfall  Income
       Partners and managing member of Endowment Restart, L.L.C.,  respectively;
       as Chairman of the Board of Directors and Secretary of Morgens  Waterfall
       Vintiadis & Company,  Inc.;  as Chairman  of the Board of  Directors  and
       Secretary  of Prime,  Inc.,  as general  partner of each of Prime  Group,
       L.P.,  Prime Group II, L.P.,  Prime Group III, L.P., Prime Group IV, L.P.
       and Prime Group V, L.P., as general  partners of Restart  Partners  L.P.,
       Restart Partners II, L.P.,  Restart Partners III, L.P.,  Restart Partners
       IV, L.P. and Restart Partners V, L.P., respectively.



                                      -52-



(4)    Bruce  Waterfall may be deemed to indirectly  beneficially  own 6,454,825
       shares of our common stock, assuming exercise of the options described in
       the last  sentence of footnote 6, by virtue of his  positions as managing
       member of each of MW Management, L.L.C., MW Capital, L.L.C. and Endowment
       Prime,  L.L.C.,  as general  partners  of Phoenix  Partners  and  Morgens
       Waterfall  Income  Partners  and managing  member of  Endowment  Restart,
       L.L.C., respectively; as President, Assistant Secretary and a Director of
       Morgens Waterfall Vintiadis & Company,  Inc.; as President and a Director
       of Prime,  Inc. as general  partner of each of Prime Group,  L.P.,  Prime
       Group II,  L.P.,  Prime Group III,  L.P.,  Prime Group IV, L.P. and Prime
       Group V, L.P.,  as general  partners of Restart  Partners  L.P.,  Restart
       Partners II, L.P.,  Restart Partners III, L.P., Restart Partners IV, L.P.
       and Restart Partners V, L.P., respectively.

(5)    The address for each member of the Morgens,  Waterfall Group is 600 Fifth
       Avenue, 27th Floor, New York, New York 10020.

(6)    Includes  options,  which are immediately  exercisable,  in the following
       amounts for each entity: Phoenix Partners (6,374 options); Betje Partners
       (2,278 options); Phaeton B.V.I. (4,532 options); Morgens Waterfall Income
       Partners (6,880 options); Restart Partners L.P. (26,096 options); Restart
       Partners II, L.P.  (51,561  options);  Restart Partners III, L.P. (42,672
       options);  Restart  Partners  IV, L.P.  (26,571  options);  MWV  Employee
       Retirement Plan Group Trust (1,648 options);  Endowment  Restart,  L.L.C.
       (37,388  options),  Edwin  H.  Morgens  may be  deemed  to have  indirect
       beneficial ownership of 204,352 options. Bruce Waterfall may be deemed to
       have indirect beneficial ownership of 204,352 options.

(7)    The  address  for Credit  Lyonnais  New York Branch is 1301 Avenue of the
       Americas, New York, NY 10019.

(8)    PPM America  Special  Investments  Fund,  L.P.  ("SIF I") and PPM America
       Special  Investments CBO II, L.P. ("CBO II") are each  investment  funds.
       Daple, S.A.  ("Daple") is a special purpose entity formed for the purpose
       of  investing,  which  invests on a pro rata basis with each of SIF I and
       CBO II. PPM America Fund  Management  GP, Inc. ("SIF I GP") serves as the
       managing general partner of SIF I. PPM America CBO II Management  Company
       ("CBO II GP") serves as the general partner of CBO II. PPM MGP (Bermuda),
       Ltd.  ("PPM  Bermuda")  serves as the  general  partner of CBO II GP. PPM
       America,  Inc. ("PPM America")  serves as investment  manager/adviser  to
       each of SIF I and CBO II.  PPM  America  also  serves  as the  investment
       adviser to Daple and PPM Bermuda serves as the special investment manager
       to Daple.  Each of SIF I GP, CBO II GP, PPM  Bermuda  and PPM America are
       subsidiaries of PPM Holdings,  Inc. ("Holdings").  The address for SIF I,
       SIF I GP,  CBO II,  and CBO II GP is 225 West  Wacker  Drive,  Suite 975,
       Chicago,  Illinois 60606,  the address for PPM America is 225 West Wacker
       Drive,  Suite  1200,  Chicago,  Illinois  60606,  and the address for PPM
       Bermuda is Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. Each
       of SIF I, SIF I GP,  CBO II,  CBO II GP,  PPM  America  and  Holdings  is
       organized  under  the  laws of the  State of  Delaware.  PPM  Bermuda  is
       organized under the laws of Bermuda. Daple is a company incorporated with
       limited liability under the laws of Luxembourg.


                                      -53-



       For  purposes of  determining  beneficial  ownership  of shares of common
       stock pursuant to Rule 13d-3  promulgated  under the Securities  Exchange
       Act of 1934, as amended,  (i) SIF I is the legal and beneficial  owner of
       10,522,770  shares of common stock (the "SIF I  Securities")  and none of
       the SIF I Securities  are owned  directly or  indirectly by SIF I GP, PPM
       America or  Holdings,  (ii) CBO II is the legal and  beneficial  owner of
       6,659,897  shares of common stock (the "CBO II  Securities")  and none of
       the CBO II Securities  are owned directly or indirectly by CBO II GP, PPM
       Bermuda,  PPM America or Holdings,  and (iii) PPM America and PPM Bermuda
       are the beneficial owners of 719,940 shares of common stock registered in
       the name of Daple (the "Daple Securities") due to the fact that Daple has
       delegated  all of its power to vote and to  acquire  and  dispose  of the
       Daple  Securities  to PPM America and PPM  Bermuda.  SIF I, SIF I GP, PPM
       America and Holdings may be deemed to share voting and  investment  power
       with respect to the SIF I Securities, CBO II, CBO II GP, PPM Bermuda, PPM
       America and Holdings may be deemed to share voting and  investment  power
       with  respect to the CBO II  Securities,  and PPM America and PPM Bermuda
       share and Holdings may be deemed to share,  voting and  investment  power
       with respect to the Daple Securities.  SIF I GP, PPM America and Holdings
       disclaim beneficial  ownership of the SIF I Securities and CBO II GP, PPM
       Bermuda,  PPM America and Holdings disclaim  beneficial  ownership of the
       CBO II Securities.  Holdings disclaims  beneficial ownership of the Daple
       Securities.


(9)     The address for Bank One N.A. is 1 Bank One Plaza, Chicago, IL 60670.

(10)    Based on information in a Schedule 13D filed by Stephen  Feinberg on May
        22, 2002, Mr.  Feinberg  possesses the sole power to vote and direct the
        disposition  of all 8,355,849  shares of common stock of Darling held by
        Cerberus Partners,  L.P. and thus may be deemed to beneficially own such
        shares. The address for Cerberus Partners, L.P. is 450 Park Avenue, 28th
        Floor, New York, NY 10022.

(11)    The address for Avenue  Special  Situations  Fund II L.P. is 535 Madison
        Avenue, 15th Floor, New York, NY 10022.


                                      -54-



Security Ownership of Management

         The  following  table  and notes set  forth  certain  information  with
respect to the beneficial  ownership of shares of our common stock,  as of March
25, 2003, by each director, each executive officer and by all executive officers
and directors as a group:



                                                                                      Common
                                                      Former       Unexercised        Stock          Percent of
                                      Common          Class A         Plan         Beneficially        Common
     Name of Individual             Stock Owned      Options (1)    Options (2)       Owned (3)      Stock Owned
     ------------------             -----------      -----------   -----------     ------------      -----------
                                                                                      

Randall C. Stuewe                             0               0         62,500           62,500               *
Denis J. Taura (4)                       30,000          30,000      1,176,000        1,236,000            2.0%
Fredric J. Klink                         90,000               0        100,000          190,000               *
O. Thomas Albrecht                            0               0          2,000            2,000               *
Charles Macaluso                              0               0          2,000            2,000               *
Richard A. Peterson                           0               0          2,000            2,000               *
James A. Ransweiler                       5,000               0        200,832          205,832               *
Joseph R. Weaver, Jr.                         0               0         14,040           14,040               *
John O. Muse                              7,500               0         18,000           25,500               *
Neil Katchen                              5,000               0         29,520           34,520               *
Mitch Kilanowski                          1,500               0         18,000           19,500               *
Gilbert L. Gutierrez                      1,300               0          9,120           10,420               *
All executive officers
  and directors as a group
  (12 persons)                          140,300          30,000      1,634,012        1,804,312            2.8%

------------------

*       Represents less than one percent of our common stock outstanding.

(1)     These Class A options were canceled and the numbers represent options to
        purchase shares of our common stock.

(2)     Represents  options that are or will be vested and exercisable within 60
        days of March 25, 2003.

(3)     Except as otherwise  indicated in the columns  "Former  Class A Options"
        and  footnote 1 and  "Unexercised  Plan  Options"  and footnote 2 and in
        footnote  4, the  persons  named in this  table  have  sole  voting  and
        investment  power with  respect to all shares of capital  stock shown as
        beneficially owned by them.

(4)     "Common Stock  Beneficially  Owned" includes  540,000 options granted to
        Mr. Taura on March 15, 2000 and an additional 540,000 options granted to
        Mr. Taura on December 13, 2000.




                                      -55-




                     DESCRIPTION OF SENIOR CREDIT AGREEMENT


The Senior Credit Agreement

         On May 13, 2002,  the new amended and  restated  credit  agreement  was
consummated  and  provides for a total of $17.3  million of  borrowing  capacity
under a revolving credit facility and $61.0 million of borrowings through a term
loan  plus  allows  us to  continue  to have  our  existing  letters  of  credit
outstanding until its expiration date. In connection with the  Recapitalization,
$55.4  million  principal  amount of loans under our  previous  credit  facility
(together with $5.3 million of accrued and unpaid  interest and commitment  fees
payable under our previous  credit  facility and the $3,855,000  forbearance fee
payable under a forbearance agreement) were cancelled. In consideration for such
cancellation we issued to the lenders  46,705,086 shares of our common stock and
100,000 shares of Series A Preferred Stock. See "Recapitalization" for a summary
description of the terms of the Recapitalization.

Terms of the Revolving Credit Facility

         Our senior credit  agreement  includes a revolving  credit facility for
loans and  letters  of credit in the  amount  of $17.3  million,  of which  $0.4
million of loans and three  letters of credit in the face  amounts of  $750,000,
$2.35 million and $7.2 million, respectively, are issued and outstanding.

         Maturity . Borrowings  under the revolving  credit  facility,  together
will all accrued and unpaid  interest on borrowings  under the revolving  credit
facility,  will mature on May 10, 2007. The revolving credit facility may not be
cancelled  or  terminated  by us  unless  the  term  loan  has  been  or will be
contemporaneously repaid in full.

         Ranking. The revolving credit facility will share a first priority lien
with the term loan on  substantially  all of our assets (subject only to certain
permitted liens); provided, however, that all obligations and indebtedness under
the revolving  credit facility will be repaid prior to those under the term loan
in the application of any payments  received after the occurrence and during the
continuance of an event of default under our senior credit agreement.

         Interest;  Fees. Interest will accrue on borrowings under the revolving
credit  facility at our election at either (i) 30, 60, or 90 day LIBOR plus 5.0%
per annum,  payable on the last day of each such LIBOR interest period,  or (ii)
Credit  Lyonnais New York  Branch's  Prime Rate plus two percent 2.0% per annum,
floating with an unused  commitment fee of 0.50% per annum and a facility fee of
1.50% per annum,  with such  prime rate  interest,  unused  commitment  fees and
facility fees being payable quarterly on the last day of the third full calendar
month  occurring  after  May 10,  2002  and the  last  day of each  third  month
thereafter  and on the  maturity  date.  As of May 13, 2002,  the interest  rate
payable on borrowings  under the revolving  credit  facility was 6.75% per annum
(Credit Lyonnais New York Branch's prime rate plus 2%).

         Letter of credit  fees  payable to the  lenders are 3% per annum on the
face amount of each letter of credit  outstanding,  payable on quarterly payment
dates in arrears plus a 0.125% per annum  "fronting fee" paid to Credit Lyonnais
New York  Branch as Agent  (for its own  account)  as  issuer of such  letter of
credit.

         Conversion.  Borrowings under the revolving credit facility will not be
convertible into our capital stock.

Terms of the Term Loan

         Our  senior  credit  agreement  includes  a term loan in the  principal
amount of $61.0 million.

         Maturity;  Payment  of  Principal  and Other  Amounts.  The term  loan,
together will all accrued and unpaid  interest on the term loan,  will mature on
May 10, 2007.

                                      -56-


         The  principal  balance  of the term loan is  required  to be repaid in
installments  due  quarterly on the last day of each third full  calendar  month
occurring  after May 10,  2002:  (i)  $300,000  will be due on each of the first
eight quarterly payment dates, and (ii) $1,200,000 will be due on each quarterly
payment  date  thereafter,  with a final  payment  in the  amount of the  entire
remaining  principal  balance and all accrued and unpaid interest  thereon being
due and payable on the maturity  date. In addition,  to the regularly  scheduled
principal and interest  payments,  we will make additional  payments on the term
loan to the  extent  of (i) 25% for 2002,  (ii) 35% for 2003,  and (iii) 50% for
each year  thereafter  of excess cash flow  (defined  generally as EBITDA,  less
scheduled  principal and interest  payments on the revolving credit facility and
the Term Loan and permitted  capital  leases,  plus or minus as applicable,  any
changes in adjusted  working  capital,  less cash taxes paid,  less any required
payments made under non-compete agreements,  less permitted capital expenditures
up to $10,800,000 for 2002 (increasing by 5% per year thereafter)),  which shall
be calculated and due annually,  such payments to be applied in inverse order of
maturity.

         Ranking.  The term loan shares a first priority lien with the revolving
credit facility on substantially  all of our assets (with the exception that all
obligations and indebtedness  under the revolving credit facility will be repaid
prior to those under the term loan in the  application of any payments  received
after the occurrence and during the continuance of an event of default under our
senior credit agreement).

         Interest.  The term loan bears  interest at our  election at either (i)
30,  60, or 90 day LIBOR  plus 5.0% per  annum,  payable on the last day of each
such LIBOR interest period,  or (ii) the Credit Lyonnais New York Branch's prime
rate plus 2.0% per annum, floating,  payable quarterly and on the maturity date.
As of May 13,  2002,  the  interest  rate payable on the term loan was 6.75% per
annum.

         Conversion.  Borrowings under the term loan are not be convertible into
our capital stock.

                          DESCRIPTION OF CAPITAL STOCK

General

         Our  authorized  capital stock consists of 100 million shares of common
stock, par value $0.01 per share, and one million shares of preferred stock, par
value  $0.01  per  share,  on a pro  forma  basis  after  giving  effect  to the
recapitalization of our company described under the section "Recapitalization."

         The  following  description  of our  capital  stock is a summary of the
material terms of such capital  stock.  The  description  does not purport to be
complete  and is subject to and  qualified  in its  entirety by reference to our
restated  certificate  of  incorporation,  as amended,  and amended and restated
bylaws, as amended, and to applicable Delaware law.

Common Stock

         As of April 28, 2003, there were 62,288,168  shares of our common stock
issued and outstanding and 100,000 shares of Series A Preferred Stock issued and
outstanding.  3,712,818  shares of common stock have been  reserved for issuance
under our stock option plans.


                                      -57-


         The holders of our common  stock are entitled to dividends as our Board
of Directors may declare from funds legally available  therefor,  subject to the
preferential rights of the holders of our preferred stock,  including our Series
A Preferred  Stock. The holders of our common stock are entitled to one vote per
share on any matter to be voted upon by  shareholders.  In  connection  with the
Recapitalization,  the lenders under our senior credit agreement, the holders of
46,705,086  shares  of our  common  stock,  were  granted  preemptive  rights to
subscribe  for shares of our common stock issued in the future.  No other holder
of our common  stock has any  preemptive  right to  subscribe  for any shares of
capital stock issued in the future.

         Upon any voluntary or involuntary liquidation,  dissolution, or winding
up of our affairs, the holders of our common stock are entitled to share ratably
in all  assets  remaining  after  payment  of  creditors  and  subject  to prior
distribution  rights of our  preferred  stock,  if any.  All of the  outstanding
shares of our common stock are fully paid and non-assessable.

Preferred Stock

         Our restated  certificate of incorporation,  as amended,  provides that
our Board of Directors may by resolution  issue  preferred  stock in one or more
classes or series and fix the  designations,  powers,  preferences and rights of
the shares of each class or series, including dividend rates, conversion rights,
voting rights, terms of redemption and liquidation  preference and the number of
shares constituting each class or series.

         Series A Preferred Stock

         In  connection  with  the  Recapitalization,  our  Board  of  Directors
authorized  the  issuance of 100,000  shares of Series A Preferred  Stock to the
Lenders.  The Series A Preferred Stock ranks senior (with respect to liquidation
payments)  to our common  stock and any  preferred  stock we issue in the future
unless otherwise  approved by the holders of 66 2/3 of the outstanding shares of
the Series A Preferred Stock.

         The  complete  text  of  the  proposed   Certificate   of   Designation
establishing  the rights and  preferences  of the  Series A  Preferred  Stock is
attached as Annex A to the Definitive  Proxy  Statement we filed with the SEC on
April  29,  2002.  We urge you to read the  Certificate  of  Designation  in its
entirety.

         Dividends.  Dividends on the Series A Preferred Stock  accumulates at a
rate of 6% per annum on the original issue price of $100 per share. Dividends on
the Series A Preferred Stock are cumulative from the issue date,  whether or not
declared,   and  accrue  semi-annually  and  may  be  either  paid  in  cash  or
accumulated, at our election. If accumulated, the dividends will be added to the
original issue price, and dividends will thereafter accrue on the original issue
price as so adjusted.  Our senior credit agreement,  however,  prohibits us from
paying  dividends  in cash so long as any  indebtedness  or  commitments  remain
outstanding under the revolving credit facility or the term loan.

                                      -58-



         Liquidation Preference. Upon any liquidation, dissolution or winding up
of our company,  each holder of Series A Preferred  Stock will be entitled to be
paid,  before any  distribution  or payment is made to the holders of our common
stock,  the sum of the original  issue price of $100 per share plus  accumulated
dividends  and  accrued  and  unpaid  dividends  not  yet  accumulated.  We  are
prohibited from issuing any other preferred stock with a liquidation  preference
equal to or greater than the Series A Preferred Stock.

         Conversion   Rights.   The  Series  A  Preferred   Stock  will  not  be
convertible.

         Mandatory Redemption.  The Series A Preferred Stock will be mandatorily
redeemable upon the earliest to occur of:

         o    a change of control of our company,

         o    a sale of all or substantially all of our consolidated assets,

         o    a dissolution or liquidation of our company, and

         o    May 10, 2007

to the extent we have legally  available  funds, at a redemption  price equal to
the  aggregate  original  issue  price  of  the  shares  to  be  redeemed,  plus
accumulated  dividends and accrued and unpaid  dividends not yet  accumulated to
the date of redemption.

         This represents a significant  future liability.  We cannot assure you,
however, that our business will generate sufficient cash flow from operations or
that future borrowings will be available to us under our senior credit agreement
in an amount sufficient to enable us to redeem the Series A Preferred Stock when
required to do so.

         For purposes of the  mandatory  redemption  provisions  of the Series A
Preferred Stock, a change of control shall be deemed to occur when:

         o    any  "person"  (as  such  term  is used in  Section  13(d)  of the
              Securities  Exchange  Act of 1934,  as  amended),  other  than the
              Lenders  and their  respective  affiliates,  individually  or as a
              group,  becomes a  "beneficial  owner" (as such term is defined in
              Rule 13d-3 and Rule 13d-5  under the  Exchange  Act),  directly or
              indirectly,  of more  than 50% of the  total  voting  power of our
              outstanding capital stock,

         o    the first day on which a majority  of the  members of our Board of
              Directors are not  "continuing  directors"  (defined as any member
              who (i) was a  member  of the  Board of  Directors  on the date of
              issuance of the Series A Preferred  Stock,  (ii) was nominated for
              election by the Lenders in  accordance  with the  Recapitalization
              Agreement,  or (iii) was nominated or elected by a majority of the
              continuing  directors  who  were  members  at  the  time  of  such
              nomination or election), or

                                      -59-




         o    our company  consolidates with, or merges with or into, any person
              or entity or any  person or entity  consolidates  with,  or merges
              with or into, our company,  pursuant to a transaction in which any
              of our  outstanding  voting  capital  stock is  converted  into or
              exchanged for cash, securities or other property.

         Optional  Redemption.  Subject  to the  prior  payment  in  full of all
indebtedness outstanding under our senior credit agreement, we may redeem shares
of Series A  Preferred  Stock in  multiples  of not less than $1  million at any
time,  upon 30  days  notice,  at a  redemption  price  equal  to the  aggregate
liquidation preference of the shares to be redeemed,  plus accumulated dividends
and accrued and unpaid  dividends not yet accumulated to the date of redemption.
If less than all shares of Series A Preferred Stock are to be redeemed, they are
required  to be  redeemed  pro-rata  based on the  number  of shares of Series A
Preferred Stock owned.

         Voting Rights.  Except as required by the Delaware General  Corporation
Law, the Series A Preferred Stock will be non-voting.

Section 203 of the Delaware  General  Corporation  Law;  Certain  Anti-Takeover,
Limited Liability and Indemnification Provisions

         Section 203 of the Delaware General Corporation Law

         The  following is a description  of certain  provisions of the Delaware
General  Corporation  Law, and our restated  certificate  of  incorporation,  as
amended,  and amended and  restated  bylaws,  as amended.  This summary does not
purport to be complete  and is  qualified  in its  entirety by  reference to the
Delaware General Corporation Law, and our restated certificate of incorporation,
as amended, and amended and restated bylaws, as amended.

         We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. Section 203 of the Delaware General Corporation Law prohibits a
publicly held  Delaware  corporation  from engaging in a "business  combination"
with an "interested  shareholder"  for a period of three years after the date of
the transaction in which the person became an "interested  shareholder,"  unless
the  business  combination  is  approved  in a  prescribed  manner.  A "business
combination"  includes  certain  mergers,  asset sales,  and other  transactions
resulting in a financial  benefit to the  "interested  shareholder."  Subject to
certain exceptions,  an "interested  shareholder" is a person who, together with
affiliates and associates,  owns, or within the past three years did own, 15% of
the corporation's voting stock.

         Certain  provisions of our restated  certificate of  incorporation,  as
amended,  and amended and restated bylaws,  as amended could have  anti-takeover
effects. Our restated certificate of incorporation, as amended provides that our
Board of Directors may issue preferred stock without shareholder  approval.  The
issuance of preferred  stock could make it more  difficult for a third-party  to
acquire us without the approval of our board.


                                      -60-


         Indemnification

         We have  included in our  restated  certificate  of  incorporation,  as
amended, and amended and restated bylaws, as amended provisions to (i) eliminate
the personal  liability of our directors  for monetary  damages  resulting  from
breaches of their fiduciary duty to the extent permitted by the Delaware General
Corporation  Law and (ii)  indemnify  our  directors and officers to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law.

Transfer Agent and Registrar

         The  Transfer  Agent and  Registrar  for our common  stock is EquiServe
Trust Company,  N.A. The Transfer Agent's address is Blue Hills Office Park, 150
Royall Street, Canton, MA 02021 and its telephone number is 781.575.3400.


                              SELLING STOCKHOLDERS


         The Series A Preferred  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  Series A  Preferred  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 Series A Preferred 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 Series A
Preferred Stock that will be held by the selling  stockholders  upon termination
of the  offering.  Shares of Series A  Preferred  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 Series A
Preferred 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.


                                      -61-


         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 Series A Preferred Stock hereunder.


--------------------------------------------------------------------------------
                                                        Series A Preferred Stock
--------------------------------------------------------------------------------
Name of Selling Stockholder                               Shares      Shares
                                                          Owned       Offered
--------------------------------------------------------------------------------
Credit Lyonnais New York Branch                            9,333        9,333
--------------------------------------------------------------------------------
PPM America Special Investments Fund, L.P.                22,531       22,531
--------------------------------------------------------------------------------
Daple, S.A.                                                1,541        1,541
--------------------------------------------------------------------------------
PPM America Special                                       14,259       14,259
  Investments CBO II, L.P.
--------------------------------------------------------------------------------
Bank One N.A.                                             13,778       13,778
--------------------------------------------------------------------------------
Credit Agricole Indosuez                                   4,444        4,444
--------------------------------------------------------------------------------
Wells Fargo Bank (Texas) National Association                  1            1
--------------------------------------------------------------------------------
Ark CLO 2000-1, Limited                                    2,222        2,222
--------------------------------------------------------------------------------
Cerberus Partners, L.P.                                   17,891       17,891
--------------------------------------------------------------------------------
Avenue Special Situations Fund II L.P.                    14,000       14,000
--------------------------------------------------------------------------------

         We have agreed to bear certain  expenses  (other than broker  discounts
and commissions, if any) in connection with the registration of the securities.


                                      -62-




                              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 100,000 shares of our Series A Preferred  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 Series A Preferred 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 Series A  Preferred  Stock from time to
time pursuant to this prospectus. The selling stockholders also may transfer and
donate the shares of Series A Preferred 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 Series A Preferred  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
Series A Preferred 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 Series A  Preferred  Stock for
              whom they may act as agent;

         o    by the writing of options on the Series A Preferred Stock;

         o    by the pledge of the Series A Preferred  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
              Series A Preferred 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  Series A  Preferred  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.


                                      -63-



         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  Series A  Preferred  Stock in the course of
hedging the positions they assume.  The selling  shareholders may also engage in
the short  sale of the Series A  Preferred  Stock and may  deliver  the Series A
Preferred  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 Series A Preferred 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 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 Series A Preferred 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 Series A Preferred Stock involved;

         o    the price at which such shares of Series A Preferred  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.


                                      -64-



         The  Registration  Rights  Agreement that was entered into among us and
the selling stockholders in connection with teh  Recapitalization  provides that
we will pay  substantially  all of the  expenses  incident to the  registration,
offering  and sale of the  shares of  Series A  Preferred  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 Series A  Preferred  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  Series  A
Preferred Stock offered by them under this prospectus.

                    MATERIAL U.S. FEDERAL TAX CONSIDERATIONS

         The following  discussion  summarizes  certain  material  United States
federal income tax considerations  generally applicable to holders acquiring the
Series A  Preferred  Stock as  capital  assets,  but  does not  purport  to be a
complete analysis of all potential tax consequences. This discussion is based on
the  Internal  Revenue Code of 1986,  as amended,  Treasury  Regulations  issued
thereunder,  and judicial and  administrative  authorities now in effect, all of
which are subject to change. Any such changes may be applied  retroactively in a
manner that could adversely affect a holder of the Series A Preferred Stock.

         The tax  treatment  of a holder  of Series A  Preferred  Stock may vary
depending  on  his  or her  particular  situation  or  status.  Certain  holders
(including  S  corporations,   insurance  companies,  tax-exempt  organizations,
financial   institutions,   regulated  investment   companies,   broker-dealers,
taxpayers  subject to  alternative  minimum tax or persons  holding the Series A
Preferred  Stock as part of a "straddle,"  "hedge" or "conversion  transaction")
may be subject to special rules not discussed  below.  The following  discussion
does not consider all aspects of United  States  federal  income tax that may be
relevant to the purchase,  ownership,  and disposition of the Series A Preferred
Stock by such holder in light of his or her personal circumstances. In addition,
the description does not consider the effect of any applicable  foreign,  state,
local, or estate or gift taxes.

         Because individual circumstances may differ, each prospective purchaser
of our Series A  Preferred  Stock is urged to consult his or her own tax advisor
with respect to his or her own  particular  tax situation and as to any federal,
foreign,  state,  local or other  tax  considerations  (including  any  possible
changes in the tax law) affecting the purchase,  holding and  disposition of our
Series A Preferred Stock.


                                      -65-




Disposition of the Securities

         Unless  a  nonrecognition   provision  applies,   the  sale,  exchange,
redemption or other  disposition of Series A Preferred  Stock will be treated as
the  disposition  of a capital  asset and  taxable for U.S.  federal  income tax
purposes.  In such event, in general,  a holder of Series A Preferred Stock will
recognize capital gain or loss equal to the difference between (i) the amount of
cash plus the fair market  value of property  received and (ii) the holder's tax
basis in the Series A Preferred  Stock. If the Series A Preferred Stock has been
held for more than one year, such gain or loss will be long-term capital gain or
loss. The deductibility of capital losses may, however, be limited.  See "Series
A Preferred Stock--Tax Aspects of Redemption Features" below for a discussion of
circumstances under which a redemption may be treated as a dividend distribution
rather than as the disposition of a capital asset.

Dividend Treatment

         Dividends on the Series A Preferred  Stock,  whether paid in cash or in
other  property,  will be taxable to the holder as ordinary income to the extent
that the cash amount,  or fair market value of the other property on the date of
distribution,  does not exceed  Darling's  current and accumulated  earnings and
profits (as  determined  for  federal  income tax  purposes).  The amount of our
company's  earnings  and profits at any  particular  time  depends on our future
actions  and  financial  performance.  To the  extent  that  the  amount  of any
distribution  exceeds our current and  accumulated  earnings  and  profits,  the
distribution  will be treated as a return of  capital,  thus  reducing  (but not
below  zero)  the  holder's  adjusted  tax  basis in such  outstanding  Series A
Preferred Stock. The amount of any such excess distribution that is greater than
the holder's adjusted tax basis in the Series A Preferred Stock will be taxed as
capital gain and will be long-term  capital gain if the holder's  holding period
for such Series A Preferred Stock exceeds one year.

         Dividends Received Deduction

         To the extent that dividends are treated as ordinary income,  dividends
received   by   corporate   holders   generally   will  be   eligible   for  the
dividends-received  deduction  under  section 243 of the Internal  Revenue Code.
There  are,   however,   many  exceptions  and  restrictions   relating  to  the
availability of such dividends-received deduction, such as restrictions relating
to (i) the holding  period of the stock on which the  dividends are sought to be
deducted,  (ii)  debt-financed  portfolio  stock,  (iii)  dividends  treated  as
"extraordinary  dividends" for purposes of section 1059 of the Internal  Revenue
Code,  discussed in  "Extraordinary  Dividends"  below, and (iv) the alternative
minimum  tax.  Corporate  stockholders  should  consult  their  own tax  advisor
regarding the extent,  if any, to which such  exceptions  and  restrictions  may
apply to their particular factual situations.

         Extraordinary Dividends

         An "extraordinary dividend," as defined in section 1059 of the Internal
Revenue  Code,  includes any dividend that (i) equals or exceeds five percent of
the holder's  adjusted tax basis in the Series A Preferred  Stock,  treating all
dividends having  ex-dividend dates within an 85-day period as one dividend,  or
(ii) exceeds twenty  percent of the holder's  adjusted tax basis in the Series A
Preferred  Stock,  treating  all  dividends  having  ex-dividend  dates within a
365-day period as one dividend.  In  determining  whether a dividend paid on the
Series A Preferred Stock is an extraordinary dividend, a holder may elect to use
the fair market value of such stock rather than its adjusted  basis for purposes
of determining the percent limitations if the holder is able to establish to the
satisfaction  of the  Secretary  of the  Treasury  the fair market  value of the
Series A Preferred Stock as of the day before the ex-dividend date.


                                      -66-




         If a corporate holder receives an "extraordinary dividend" from Darling
with respect to Series A Preferred  Stock that it has not held for more than two
years before the dividend announcement date, the basis of the Series A Preferred
Stock  will be  reduced  (but not below  zero) by the  non-taxed  portion of the
dividend. If, because of the limitation on reducing basis below zero, any amount
of the non-taxed  portion of an  extraordinary  dividend has not been applied to
reduce  basis,  such amount will be treated as gain from the sale or exchange of
the Series A Preferred Stock in the year in which the extraordinary  dividend is
received.  Generally,  the non-taxed portion of an extraordinary dividend is the
amount excluded from income as a dividends-received deduction.

         Certain  "qualified  preferred  dividends" are generally not considered
extraordinary  dividends.  A qualified  preferred dividend is any fixed dividend
payable with respect to  preferred  stock that (i) provides for fixed  preferred
dividends  payable not less  frequently than annually and (ii) is not in arrears
as to  dividends  when  acquired  and (iii) the actual  rate of return  does not
exceed 15%. If the actual rate of return, as determined under section 1059(e)(3)
of the Internal  Revenue Code, on such  preferred  stock does not exceed fifteen
percent  and the holder has held the  preferred  stock for more than five years,
then  any  qualified  preferred  dividend  as  to  such  stock  will  not  be an
extraordinary  dividend.  However,  if the  actual  rate of  return is less than
fifteen  percent,  and the holder  sells the  qualified  preferred  stock before
holding it for more than five years,  then some of the dividend  will be treated
as an  extraordinary  dividend,  but only to the  extent to which the  qualified
preferred  dividends  paid exceed the qualified  preferred  dividends that would
have been paid during such period on the basis of the stated rate of return.

         The Internal Revenue Code specifies that in certain cases extraordinary
dividend  treatment  will be required  without  regard to holding  periods or to
whether a dividend  qualifies as a qualified  preferred  dividend.  The Internal
Revenue Code  requires  that an  extraordinary  dividend will include any amount
treated  as a dividend  in the case of a  redemption  of the Series A  Preferred
Stock  that  is (i)  non-pro  rata as to all  holders,  (ii)  part of a  partial
liquidation of our company,  or (iii) that would not have been treated (in whole
or in part) as a dividend if (a) any stock  options had not been counted  toward
stock  ownership  pursuant to the  attribution  rules of Internal  Revenue  Code
section  318 or (b)  section  304(a)  (dealing  with  the  sale  of  stock  by a
controlling person among brother-sister  corporations) had not been applied. See
"Series  A  Preferred  Stock--Tax  Aspects  of  Redemption  Features"  below for
additional  discussion  of the  application  of section  1059 in the  redemption
context.

Series A Preferred Stock--Tax Aspects of Redemption Features

         The Series A Preferred Stock is subject to mandatory  redemption on the
fifth anniversary of the closing date of the Recapitalization.  In addition, the
Series A Preferred  Stock is redeemable by us at any time upon 30 days notice at
a redemption price equal to the aggregate  liquidation  preference of the shares
to be  redeemed,  plus  accrued  and unpaid  dividends,  if any,  to the date of
redemption. See "Description of Capital Stock" above. Pursuant to section 305(c)
of the  Internal  Revenue  Code,  holders  of  Series A  Preferred  Stock may be
required  to treat a portion of the  difference  between  the Series A Preferred
Stock's issue price and its redemption  price as constructive  distributions  of
property  includable in income on a periodic basis.  For purposes of determining
whether  such  constructive   distribution   treatment  applies,  the  mandatory
redemption  and the  optional  redemption  are tested  separately.  Constructive
distribution  treatment  is  required  if  either  (or  both) of these  tests is
satisfied.


                                      -67-



         Section  305(c) of the Internal  Revenue Code  provides that the entire
amount of a redemption  premium with respect to preferred  stock that is subject
to mandatory  redemption is treated as being  distributed to the holders of such
preferred  stock on an  economic  accrual  basis  over the  period  the stock is
outstanding.  Preferred  stock  generally  is  considered  to have a  redemption
premium for this purpose if the redemption price exceeds its issue price by more
than a de minimis amount. For this purpose,  such excess will be treated as zero
if it is less than 1/4 of 1% of the redemption price multiplied by the number of
complete  years from the date of  issuance  of the stock until the stock must be
redeemed.  The  Series A  Preferred  Stock  provides  for  cumulative  preferred
dividends.  Thus, the redemption price will depend on whether  dividends on such
stock are paid currently. If all of the cumulative dividends are paid currently,
the  redemption  price will equal the issue price.  The  legislative  history of
Internal  Revenue Code Section  305(c) states that if at the time of issuance of
cumulative  preferred  stock there is "no  intention"  for  dividends to be paid
currently,  the IRS may treat such dividends as a disguised  redemption premium.
Under  that  approach,  the  excess  of the  redemption  price  of the  Series A
Preferred  Stock  (including  any disguised  redemption  premium) over its issue
price is taxable as  constructive  distributions  to the  holder  (treated  as a
dividend to the extent of our  company's  current and  accumulated  earnings and
profits  and   otherwise   subject  to  the   treatment   described   above  for
distributions)  over the term of the preferred  stock using a constant  interest
rate method similar to that for accruing  original issue discount.  To date, the
IRS has not  promulgated  such  regulations,  although the issue  remains  under
consideration.  In the  current  situation,  our  company  intends  to take  the
position  that we do not have  "no  intention"  of  paying  dividends  currently
(although the agreement  governing our senior credit agreement prohibits us from
paying any cash dividends while any indebtedness  remains outstanding under such
agreement)  and thus that holders of the Series A Preferred  Stock should not be
required to treat any excess of the final  redemption price over the issue price
as a  series  of  constructive  distributions  over  the  period  such  stock is
outstanding.  This issue is not, however,  free from doubt.  Holders of Series A
Preferred  Stock are urged to consult  their tax  advisors  with respect to this
issue.

         Constructive  distributions  on the Series A Preferred Stock will arise
on account of the optional redemption feature only if, based on all of the facts
and  circumstances  as of the  date  the  Series A  Preferred  Stock is  issued,
redemption pursuant to the optional redemption is more likely than not to occur.
Even  if the  redemption  were  more  likely  than  not to  occur,  constructive
distribution treatment would not result if the redemption premium were solely in
the nature of a penalty for premature  redemption.  For this purpose,  a penalty
for  premature  redemption  is a premium over which  neither our company nor the
holder has legal or practical  control,  such as changes in prevailing  dividend
rates.  Regulations promulgated pursuant to Internal Revenue Code section 305(c)
provide a safe harbor pursuant to which constructive distribution treatment will
not  result  from an issuer  call  right if (i) the  issuer  and the  holder are
unrelated, (ii) there are no arrangements that effectively require the issuer to
redeem the stock and (iii) exercise of the option to redeem would not reduce the
yield of the stock.  We do not believe  that the  optional  redemption  would be
treated as more likely than not to be exercised under these rules.

         A redemption of shares of Series A Preferred  Stock may be treated as a
dividend,  rather than as the  disposition of a capital asset,  to the extent of
our current or  accumulated  earnings  and profits  (as  determined  for federal
income  tax  purposes),  unless  the  redemption  (i)  results  in  a  "complete
termination"  of the  holder's  stock  interest  in our  company  under  section
302(b)(3)  of the  Internal  Revenue  Code,  (ii)  results  in a  "substantially
disproportionate"  redemption  of stock with respect to the holder under section
302(b)(2) of the Internal Revenue Code, or (iii) is "not essentially  equivalent
to a  dividend"  with  respect  to the holder  under  section  302(b)(1)  of the
Internal  Revenue Code. In  determining  whether the  redemption is treated as a
dividend,  the holder must take into  account not only stock he or she  actually
owns, but also stock he or she constructively owns within the meaning of section
318.


                                      -68-



         A  distribution  to a holder will be "not  essentially  equivalent to a
dividend"  if it results  in a  "meaningful  reduction"  in the  holder's  stock
interest  in our  company.  For these  purposes,  a  redemption  of the Series A
Preferred Stock that results in a reduction in the proportionate interest in our
company  (taking into account any  ownership of the common stock and any Darling
stock that is constructively owned) of a holder whose relative stock interest is
minimal (an interest of less than one percent should  satisfy this  requirement)
and who  exercises no control  over  corporate  affairs  should be regarded as a
meaningful reduction in the holder's stock interest in Darling. See "Disposition
of  Securities"  above  for a  discussion  of the tax  consequences  of having a
redemption  treated as the sale or exchange of a capital asset and see "Dividend
Treatment"  above for the  consequences  of  having a  redemption  treated  as a
dividend distribution.

         Under  section  1059 of the  Internal  Revenue  Code,  as  discussed in
"Dividend  Treatment--Extraordinary  Dividends" above, an extraordinary dividend
includes any  redemption  of stock that is treated as a dividend that is non-pro
rata as to all  holders of our  stock,  including  holders of the common  stock,
irrespective of the holding period.  Consequently,  to the extent the redemption
of Series A Preferred  Stock  constitutes  a  dividend,  it will  constitute  an
extraordinary dividend to a corporate holder. If the redemption is treated as a
dividend  because  options  are being  counted as stock  ownership  pursuant  to
Internal  Revenue Code section 318,  such holders are also required to recognize
gain  under  section  1059 of the  Internal  Revenue  Code with  respect  to any
redemption  treated  as a  dividend  (in  whole or in part)  when the  non-taxed
portion of the dividend exceeds the basis of the shares surrendered.

Foreign Shareholders

         Dividends  received by a  nonresident  alien,  foreign trust or estate,
foreign  corporation,  or  foreign  partnership  in  respect  of the  Securities
generally  will be subject to withholding of United States federal income tax at
the rate of 30% (or lower treaty rate). If, however, the dividend is effectively
connected with the foreign  shareholder's  conduct of a trade or business within
the United States or, where a tax treaty  applies,  is attributable to a foreign
shareholder's  permanent  establishment  maintained  in the United  States,  the
dividend  will be  subject  to  federal  income  tax on a net  income  basis  at
applicable  graduated  individual or corporate rates and will be exempt from the
30% withholding tax. In addition,  dividends that are effectively connected to a
United States trade or business or  attributable  to a United  States  permanent
establishment may be subject to an additional "branch profits tax" at a 30% rate
(or lower treaty rate).

         Under currently applicable Treasury  regulations,  dividends paid to an
address  outside  the United  States may be presumed to be paid to a resident of
such country,  unless the payor has  knowledge to the contrary,  for purposes of
the withholding tax rates (including treaty rates) discussed above.


                                      -69-





         For purposes of obtaining a reduced rate of withholding under an income
tax  treaty,  a  foreign   shareholder  will  be  required  to  provide  certain
information  concerning  his or her country of residence and  entitlement to tax
treaty  benefits.  If an  exemption  from  withholding  is claimed,  the foreign
shareholder must provide appropriate certification (for example, IRS Form W-8BEN
for foreign  individuals) to our company.  If a foreign  shareholder is eligible
for a  reduced  rate of United  States  federal  withholding  tax,  the  foreign
shareholder may obtain a refund of any excess withheld  amounts by timely filing
an appropriate claim for refund.

         Generally,  a foreign  shareholder will not be subject to United States
federal income tax on any gain recognized upon capital asset  disposition of the
Series A Preferred  Stock.  However,  a foreign  shareholder  will be subject to
federal income tax on the gain if (i) the gain is effectively connected with the
foreign  shareholder's  United  States  trade or  business  or, if a tax  treaty
applies,  attributable  to the foreign  shareholder's  United  States  permanent
establishment,  (ii) if the foreign shareholder is an individual who is a former
citizen of the  United  States who lost such  citizenship  within the  preceding
ten-year  period,  or  former  long-term  resident  of  the  United  States  who
relinquished  United States residency on or after February 6, 1995, and the loss
of citizenship or permanent  residency had as one of its principal  purposes the
avoidance  of  United  States  tax;  or  (iii)  the  foreign  shareholder  is  a
non-resident  alien individual who has been present in the United States for 183
days or more during the  taxable  year of the  disposition  and either (a) has a
"tax home" in the United States for United States federal income tax purposes or
(b) the gain is  attributable  to an office  or other  fixed  place of  business
maintained by the foreign shareholder in the United States.

         Because of the  complexity  of the  Internal  Revenue  Code  provisions
dealing  with the  taxation of foreign  shareholders  and the  possibility  that
treaty  provisions  may affect the  application  of such  Internal  Revenue Code
provisions,  foreign  shareholders  are urged to consult  their own tax advisors
with respect to the particular tax  consequences to them of an investment in our
company.

Backup Withholding

         We generally will be required to withhold  federal income tax at a rate
of 30% (in 2003) from dividends  paid and redemption  proceeds to the holders of
Series A Preferred Stock if (i) the holder fails to furnish us with the holder's
correct  taxpayer  identification  number or social  security number and to make
such  certifications  as we may require,  (ii) the IRS notifies the holder or us
that the holder has failed to report  properly  certain  interest  and  dividend
income to IRS and to respond to notices to that effect,  or (iii) when  required
to do so,  the  shareholder  fails to certify  that he is not  subject to backup
withholding.  Any amounts  withheld  may be credited  against the  shareholder's
federal income tax liability.

         The foregoing  discussion of certain federal income tax  considerations
does not  consider the facts and  circumstances  of any  particular  prospective
purchaser  situation  or status.  Accordingly,  each  purchaser  of our Series A
Preferred  Stock  should  consult his or her own tax advisor with respect to the
tax consequences to him or her, including those under state, local, foreign, and
other tax laws.


                                      -70-



                                  LEGAL MATTERS

     The validity of our Series A Preferred  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

         The consolidated  financial  statements and schedule as of December 28,
2002 and December 29, 2001 and for the years ended  December 28, 2002,  December
29,  2001  and  December  30,  2000  included  in  this  prospectus  and  in the
registration  statement of which this prospectus is a part have been so included
in  reliance  upon the report of KPMG LLP,  independent  accountants,  appearing
elsewhere  herein and upon the  authority of said firm as experts in  accounting
and  auditing.  The audit  report of KPMG LLP dated March 10, 2003  covering the
December 28, 2002  consolidated  financial  statements 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.

                       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-1  under the  Securities  Act with
respect to our Series A Preferred 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 Series A Preferred  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


                                      -71-



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                          Pages
                                                                          -----


Consolidated Financial Statements as of March 29, 2003 and March 30, 2002
and for the Three Months Ended March 29, 2003 and March 30, 2002 (unaudited)

Consolidated Balance Sheets.................................................F-2

Consolidated Statements of Operations.......................................F-3

Consolidated Statements of Cash Flows.......................................F-4

Notes to Consolidated Financial Statements..................................F-5

Consolidated Financial Statements as of December 28, 2002 and December 29, 2001
and for the Three Years Ended December 28, 2002

Independent Auditors' Report...............................................F-12

Consolidated Balance Sheets................................................F-13

Consolidated Statements of Operations......................................F-14

Consolidated Statements of Stockholders' Equity............................F-15

Consolidated Statements of Cash Flows......................................F-16

Notes to Consolidated Financial Statements.................................F-17



                                      F-1




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                      March 29, 2003 and December 28, 2002
                (in thousands, except shares and per share data)




                                                                           March 29,           December 28,
                                                                             2003                  2002
                                                                         --------------      --------------
ASSETS                                                                    (unaudited)
------
Current assets:
                                                                                            
     Cash and cash equivalents                                             $  10,863              $  15,537
     Accounts receivable                                                      20,806                 24,099
     Inventories                                                              10,984                  7,006
     Prepaid expenses                                                          5,575                  4,975
     Deferred income taxes                                                     2,637                  3,659
     Assets held for sale (note 10)                                            1,028                    968
     Other                                                                        35                     63
                                                                        ------------            -----------
         Total current assets                                                 51,928                 56,307

Property, plant and equipment, less accumulated depreciation
   of $154,397 at March 29, 2003 and $153,029 at December 28, 2002            73,570                 72,954
Collection routes and contracts, less accumulated amortization of
   $24,991 at March 29, 2003 and $23,956 at December 28, 2002                 22,617                 23,088
Goodwill, less accumulated amortization of $1,077 at both March 29, 2003
   and December 28, 2002                                                       4,429                  4,429
Deferred loan costs                                                            3,601                  3,822
Other noncurrent assets                                                        2,409                  2,312
                                                                           ---------              ---------
                                                                            $158,554               $162,912
                                                                             =======                =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Current portion of long-term debt (note 6)                           $    8,033             $    8,372
     Accounts payable, principally trade                                       9,974                  9,902
     Accrued expenses                                                         27,734                 28,567
     Accrued interest                                                            314                    314
                                                                          ----------             ----------
         Total current liabilities                                            46,055                 47,155

Long-term debt, less current portion (note 6)                                 54,583                 60,055
Other non-current liabilities                                                  7,343                  7,530
Deferred income taxes                                                          2,637                  3,659
                                                                           ---------              ---------
         Total liabilities                                                   110,618                118,399
                                                                             -------                -------
Redeemable Preferred Stock,  $0.01 par value, 1,000,000 shares
        authorized, 100,000 shares outstanding (note 6)                        8,955                  8,599

Stockholders' equity  (note 6):
     Common stock, $0.01 par value; 100,000,000 shares authorized;
        62,309,168 and 62,302,448 shares issued and outstanding at
        March 29, 2003 and at December 28, 2002, respectively                    623                    623
     Additional paid-in capital                                               74,395                 74,747
     Treasury stock, at cost;  21,000 shares at March 29, 2003 and
          December 28, 2002                                                     (172)                  (172)
     Accumulated comprehensive loss                                           (3,907)                (3,907)
     Accumulated deficit                                                     (31,958)               (35,377)
                                                                            --------               --------
         Total stockholders' equity                                           38,981                 35,914
                                                                            --------               --------
Contingencies (note 3)
                                                                            $158,554               $162,912
                                                                             =======                =======


                   The accompanying notes are an integral part
                   of these consolidated financial statements.


                                      F-2






                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
              Three months ended March 29, 2003 and March 30, 2002
                      (in thousands, except per share data)
                                   (unaudited)



                                                                            Three Months Ended
                                                                     March 29,            March 30,
                                                                       2003                  2002
                                                                     ---------            ---------
                                                                                    
Net sales                                                          $  68,651              $  58,679
Costs and expenses:
     Cost of sales and operating expenses                             51,050                 43,745
     Selling, general and administrative expenses                      8,520                  7,158
     Depreciation and amortization                                     3,657                  4,088
                                                                   ---------              ---------
          Total costs and expenses                                    63,227                 54,991
                                                                    --------               --------
          Operating income                                             5,424                  3,688
                                                                   ---------               --------

Other income (expense):
     Interest expense                                                   (492)                (3,885)
     Other, net                                                          583                    734
                                                                  ----------              ---------
          Total other income (expense)                                    91                 (3,151)
                                                                 -----------               --------

Income from continuing operations before income taxes                  5,515                    537
Income taxes                                                          (2,096)                     -
                                                                   ---------            -----------
     Income from continuing operations                                 3,419                    537
Discontinued operations
     Income from discontinued operations, net of tax (note 11)             -                     46
                                                                ------------              ---------
Net income                                                             3,419                    583
    Preferred dividends and accretion                                   (355)                     -
                                                                  ----------              ---------
    Net income applicable to common shareholders                  $    3,064               $    583
                                                                   =========                =======

Basic and diluted income per share (note 2):
     Continuing operations                                       $      0.05              $    0.04
     Discontinued operations                                               -                      -
                                                                ------------              ---------
          Total                                                  $      0.05              $    0.04
                                                                  ==========               ========



                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                      F-3




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
              Three Months ended March 29, 2003 and March 30, 2002
                                 (in thousands)
                                   (unaudited)



                                                                                    Three Months Ended
                                                                         ----------------------------------
                                                                             March 29,             March 30,
                                                                                2003                 2002
                                                                         -------------------  -------------
                                                                                             
Cash flows from operating activities:
     Income from continuing operations                                         $   3,419           $    537
     Adjustments to reconcile net income to
      net cash provided by continuing operating activities:
        Depreciation and amortization                                              3,657              4,088
        Loss on disposal of property, plant, equipment and other assets                5               (901)
        Gain on early extinguishment of debt                                        (816)                 -
        Changes in operating assets and liabilities:
         Accounts receivable                                                       3,293              4,762
         Inventories and prepaid expenses                                         (4,578)            (1,098)
         Accounts payable and accrued expenses                                      (761)            (4,999)
         Accrued interest                                                              -              2,142
         Other                                                                       (35)                24
                                                                             -----------          ---------
Net cash provided by continuing operations                                         4,184              4,555
Net cash provided by discontinued operations                                           -                351
                                                                             -----------          ---------
             Net cash provided by operating activities                             4,184              4,906
                                                                             -----------          ---------

Cash flows from investing activities:
     Capital expenditures                                                         (2,679)            (3,622)
     Business acquisitions                                                        (1,105)                 -
     Gross proceeds from disposal of property, plant and equipment
        and other assets                                                              13                946
                                                                               ---------          ---------
              Net cash used by investing activities                               (3,771)            (2,676)
                                                                               ---------          ---------

Cash flows from financing activities:
     Proceeds from debt                                                           50,145             47,291
     Payments on debt                                                            (55,151)           (50,097)
     Paid in capital on common stock issued                                            3                  -
     Contract payments                                                               (84)               (93)
                                                                               ---------         ----------
              Net cash used by financing activities                               (5,087)            (2,899)
                                                                               ---------         ----------

Net decrease in cash and cash equivalents                                         (4,674)              (669)
Cash and cash equivalents at beginning of period                                  15,537              3,668
                                                                                --------          ---------
Cash and cash equivalents at end of period                                     $  10,863         $    2,999
                                                                                ========          =========
Supplemental disclosure of cash flow information:
     Cash paid during the period for:
         Interest                                                              $     492         $    1,743
                                                                                ========          =========
         Income taxes, net of refunds                                          $     519         $        -
                                                                                ========          =========


                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                      F-4





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 29, 2003
                                   (unaudited)

(1)    General

       The accompanying  consolidated  financial  statements for the three month
       periods  ended March 29,  2003 and March 30,  2002 have been  prepared in
       accordance with generally  accepted  accounting  principles in the United
       States of America by Darling  International  Inc. (the "Company") without
       audit,  pursuant  to the  rules and  regulations  of the  Securities  and
       Exchange  Commission ("SEC").  The information  furnished herein reflects
       all adjustments (consisting only of normal recurring accruals) which are,
       in the opinion of  management,  necessary to present a fair  statement of
       the financial position and operating results of the Company as of and for
       the  respective  periods.   However,  these  operating  results  are  not
       necessarily  indicative  of the results  expected for a full fiscal year.
       Certain information and footnote  disclosures normally included in annual
       financial  statements  prepared in  accordance  with  generally  accepted
       accounting  principles  have  been  omitted  pursuant  to such  rules and
       regulations.  However, management of the Company believes, to the best of
       their  knowledge,  that the  disclosures  herein are adequate to make the
       information  presented  not  misleading.  The  accompanying  consolidated
       financial  statements  should  be read in  conjunction  with the  audited
       consolidated  financial  statements  contained in the Company's Form 10-K
       for the fiscal year ended December 28, 2002.

(2)    Summary of Significant Accounting Policies

       (a)    Basis of Presentation

       The consolidated financial statements include the accounts of the Company
       and  its  subsidiaries.   All  significant   intercompany   balances  and
       transactions have been eliminated in consolidation.

       (b)    Fiscal Periods

       The Company has a 52/53 week fiscal year ending on the  Saturday  nearest
       December 31. Fiscal  periods for the  consolidated  financial  statements
       included  herein are as of March 29, 2003, and include the 13 weeks ended
       March 29, 2003, and the 13 weeks ended March 30, 2002.

       (c)    Earnings Per Share

       Basic and  diluted net income per common  share are  computed by dividing
       net income  applicable  to common  shareholders  by the weighted  average
       number of common stock shares  outstanding  during the period. On May 13,
       2002, the Company  consummated a  recapitalization  and issued 46,705,086
       shares of common stock (see note 6).

       The weighted average common shares used for basic income per common share
       were  62,281,670 and 15,568,362 for the three months ended March 29, 2003
       and March 30, 2002, respectively.

       The weighted  average  common  shares used for diluted  income per common
       share were 63,665,325 and 15,568,362 for the three months ended March 29,
       2003 and March 30, 2002, respectively.

       1,321,430 outstanding stock options were excluded from diluted income per
       common share for the three months ended March 29, 2003, as the effect was
       antidilutive;  and 2,343,938 outstanding stock options were excluded from
       diluted  income per common  share for the three  months  ended  March 30,
       2002, as the effect was antidilutive.

                                      F-5


                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 29, 2003
                                   (unaudited)

       (d)    Accounting for Stock-Based Compensation

       The Company  accounts  for its stock option plan in  accordance  with the
       provisions  of  Accounting  Principles  Board  ("APB")  Opinion  No.  25,
       Accounting for Stock Issued to Employees, and related interpretations. As
       such,  compensation  expense is recorded on the date of grant only if the
       current market price of the underlying  stock exceeds the exercise price.
       Statement of Financial  Accounting Standards ("SFAS") No. 123, Accounting
       for Stock-Based  Compensation,  permits  entities to recognize as expense
       over the vesting period the fair value of all  stock-based  awards on the
       date of grant. Alternatively, SFAS No. 123 allows entities to continue to
       apply the  provisions  of APGB  Opinion  No. 25 and provide pro forma net
       income and pro forma  earnings per share  disclosures  for employee stock
       option  grants made in 1995 and future  years as if the  fair-value-based
       method defined in SFAS No. 123 had been applied.  The Company has elected
       to continue to apply the provisions of APB Opinion No. 25 and provide the
       pro forma disclosure provisions of SFAS No. 123.

       The  following  table  illustrates  the effect on net  income  (loss) and
       income  (loss) per share if the fair value based  method had been applied
       to all outstanding and invested awards in each period.




                                                                               March 29,               March 30,
                                                                                  2003                    2002
                                                                         ----------------------- -----------------------
                                                                           amount     per share     amount     per share
                                                                         ----------- ----------- ------------ -----------
                                                                         ----------- ----------- ------------ -----------
                                                                                                    
                Reported net income applicable to common shareholders
                                                                           $ 3,064     $ 0.05      $  583       $ 0.04
                Deduct total stock-based employee compensation expense
                   determined under fair-value-based method for all
                   rewards, net of tax                                         (95)         -         (32)           -
                                                                          ---------     -----    ---------       -----

                Pro forma                                                  $ 2,969     $ 0.05      $  551       $ 0.04
                                                                            ======      =====       =====        =====


         (e)  New Accounting Standards

       The Company adopted Statement of Financial  Accounting  Standard No. 143,
       Accounting for Asset Retirement Obligations ("SFAS 143"). The adoption of
       SFAS  143 did not  have a  material  effect  on the  Company's  financial
       statements.

       The Company adopted Statement of Financial  Accounting  Standard No. 146,
       Accounting for Costs Associated with Exit or Disposal  Activities  ("SFAS
       146").  The  adoption  of SFAS 146 did not have a material  effect on the
       Company's financial statements.
(3)    Contingencies

       LITIGATION

       Melvindale

       A group of residents living near the Company's Melvindale, Michigan plant
       has filed  suit,  purportedly  on behalf of a class of persons  similarly
       situated  ("Melvindale  I"). The class has been  certified for injunctive
       relief  only.  The  court  declined  to  certify  a damage  class but has
       permitted approximately 300 people to join the lawsuit as plaintiffs. The
       suit is based on legal  theories of  trespass,  nuisance  and  negligence
       and/or gross  negligence,  and is pending in the United  States  District
       Court, Eastern District of Michigan.  Plaintiffs allege that emissions to
       the air,  particularly  odor,  from the plant have  reduced the value and
       enjoyment  of  Plaintiffs'  property,  and  Plaintiffs  seek  unspecified
       compensatory and exemplary  damages in an amount in excess of $25,000 per
       Plaintiff and  unspecified  injunctive  relief.  The Company is unable to
       estimate its potential liability, if any, from this lawsuit. In a lawsuit
       with similar factual allegations,  also pending in United States District
       Court,  Eastern  District of Michigan,  the City of Melvindale  has filed
       suit against the Company based on legal  theories of nuisance,  trespass,
       negligence  and  violation  of  Melvindale  nuisance  ordinances  seeking
       damages and  declaratory and injunctive  relief.  The court has dismissed
       the  trespass  counts in both  lawsuits.  The property  damage  claims in
       Melvindale  I have been  dismissed,  and all of the damage  claims in the
       suit filed by the City of  Melvindale  have been  dismissed.  The City of
       Melvindale now seeks unspecified  injunctive  relief.  In April,  2002, a
       group of residents living near the Company's Melvindale,  Michigan plant,

                                        F-6



                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 29, 2003
                                   (unaudited)

       represented  by named  plaintiffs  not listed in the Melvindale I lawsuit
       but purportedly on behalf of a class of persons defined similarly to that
       in Melvindale I filed a suit ("Melvindale II").  Plaintiffs in Melvindale
       II rely on essentially the same legal theories and factual allegations as
       originally  set  forth  in  Melvindale  I.  However,  the  Melvindale  II
       Plaintiffs  purportedly  seek  only  damages  in an  amount  of more than
       $25,000 and less than $75,000 per member of the putative class and do not
       seek  injunctive  relief.  The Company  removed  Melvindale II, which was
       originally  filed in the Circuit Court of Wayne  County,  Michigan to the
       United States  District  Court,  Eastern  District of Michigan  where the
       Melvindale I and the City of Melvindale  lawsuits are pending. On October
       21, 2002,  the Melvindale II lawsuit was remanded to Wayne County Circuit
       Court.  No action  has been  taken by the  court  with  respect  to class
       certification. The Company is unable to estimate its potential liability,
       if any, from this lawsuit.  The Company or its predecessors have operated
       a  rendering  plant at the  Melvindale  location  since 1927 in a heavily
       industrialized  area down river south of  Detroit.  The Company has taken
       and is taking all  reasonable  steps to minimize odor  emissions from its
       recycling processes and is defending the lawsuits vigorously.

       Long Island City, NY

       The  Company  is  a  party  to  a  lawsuit   that  seeks  to  require  an
       environmental  cleanup at a property in Long Island City,  New York where
       the Company  formerly  operated a  rendering  plant  (referred  to as the
       "Site").  DMJ Associates  (DMJ),  which holds a mortgage on the Site, has
       filed suit against the Company, as a former owner of the Site, as well as
       others including the present tenants and operators of the Site, the owner
       of an abandoned  hazardous  waste  disposal site  adjoining the Site (the
       "Disposal  Facility"),  and  companies  that  disposed  of  wastes at the
       Disposal  Facility (the "Generator  Defendants").  DMJ argues that, inter
       alia,  under  federal law it is  entitled to relief  directed to have the
       defendants  remediate  the  contamination.  DMJ seeks both  equitable and
       monetary  relief from all  defendants  for  investigation,  abatement and
       remediation of the Site. DMJ has not yet provided information  sufficient
       for the Company to ascertain the magnitude or amount of DMJ's total claim
       nor the Company's  alleged  share  thereof.  As a result,  the Company is
       unable to estimate its  potential  liability,  if any, from this lawsuit.
       The Company does not have  information  suggesting that it contributed in
       any material  way to any  contamination  that may exist at the Site.  The
       Company is  actively  defending  the suit and is awaiting a decision on a
       motion on summary judgment regarding the standing of the plaintiff.

       Sauget, Illinois

       The  Company  has  concluded  a  settlement  agreement  with  Solutia and
       Pharmacia to satisfy claims for remediation  costs in the pending lawsuit
       related to an environmental cleanup in or near Sauget,  Illinois,  and in
       return has received an indemnity and hold harmless agreement from Solutia
       and  Pharmacia  for any claims from others for costs  related to the same
       remediation  effort.  The  United  States had filed a  complaint  against
       Monsanto Chemical Company,  Solutia,  Inc.,  Anheuser-Busch,  Inc., Union
       Electric,  and 14 other  defendants,  seeking to recover  cleanup  costs.
       Monsanto (which merged with Pharmacia and Upjohn, Inc. in 2000 and is now
       known as Pharmacia  Corporation)  and Solutia in turn filed a third party
       complaint seeking  contribution  from the United States,  several federal
       agencies,  and  six  more  companies,  in  addition  to  the  Company.  A
       subsidiary of the Company had operated an inorganic  fertilizer  plant in
       Sauget, Illinois for a number of years prior to closing it in the 1960's.
       The Company cannot predict what, if any,  additional  remediation efforts
       might be necessary in the Sauget,  Illinois  area, or whether it might be
       made a party to any litigation related to such additional remediation.

       Other Litigation

       The Company is also a party to several  other  lawsuits,  claims and loss
       contingencies incidental to its business, including assertions by certain
       regulatory  agencies  related  to  air,   wastewater,   and  storm  water
       discharges from the Company's processing facilities.



                                       F-7


                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 29, 2003
                                   (unaudited)

       Self Insured Risks

       The  Company  purchases  its  workers  compensation,   auto  and  general
       liability  insurance on a retrospective  basis. The Company estimates and
       accrues its expected  ultimate costs related to claims  occurring  during
       each fiscal year and carries this accrual as a reserve  until such claims
       are paid by the Company.

       As a result of the matters  discussed  above, the Company has established
       loss reserves for insurance,  environmental  and litigation  matters.  At
       March 29,  2003,  and  December  28,  2002,  the reserve  for  insurance,
       environmental and litigation contingencies reflected on the balance sheet
       in accrued expenses and other non-current liabilities,  was approximately
       $12.5 million and $14.0 million, respectively.  Management of the Company
       believes these reserves for  contingencies  are reasonable and sufficient
       based upon present  governmental  regulations and  information  currently
       available to  management;  however,  there can be no assurance that final
       costs related to these  matters will not exceed  current  estimates.  The
       Company believes that any additional  liability relative to such lawsuits
       and claims which may not be covered by insurance  would not likely have a
       material adverse effect on the Company's financial position,  although it
       could  potentially have a material impact on the results of operations in
       any one year.

(4)    Business Segments

       The Company  operates on a worldwide basis within two industry  segments:
       Rendering and Restaurant Services. The measure of segment profit includes
       all revenues,  operating  expenses  (excluding  certain  amortization  of
       intangibles),  and selling,  general and administrative expenses incurred
       at all  operating  locations  and excludes  general  corporate  expenses.
       Included in corporate  activities are general corporate  expenses and the
       amortization of intangibles related to "Fresh Start Reporting." Assets of
       corporate activities include cash, unallocated prepaid expenses, deferred
       tax assets, prepaid pension, and miscellaneous other assets.

              Rendering

              Rendering  consists of the  collection  and  processing  of animal
              by-products  from butcher shops,  grocery  stores and  independent
              meat and poultry  processors,  converting  these  by-products into
              similar products such as useable oils and proteins utilized by the
              agricultural and oleochemical industries.

              Restaurant Services

              Restaurant  Services  consists of the  collection  of used cooking
              oils from food  service  establishments  and  recycling  them into
              similar  products such as high-energy  animal feed ingredients and
              industrial  oils.  Restaurant  Services also provides  grease trap
              servicing and equipment sales.

              Business Segment Net Sales (in thousands):

                                                   Three Months Ended
                                           -----------------------------------
                                                March 29,        March 30,
                                                 2003              2002
                                           -----------------------------------
                Rendering:
                   Trade                       $  46,153         $  42,593
                   Intersegment                    6,909             7,843
                                               ---------         ---------
                                                  53,062            50,436
                                                --------          --------
                Restaurant Services:
                   Trade                          22,498            16,086
                   Intersegment                    3,003             1,976
                                               ---------         ---------
                                                  25,501            18,062
                                                --------          --------

                Eliminations                      (9,912)           (9,819)
                                                --------          --------
                Total                           $ 68,651         $  58,679
                                                 =======          ========

                                      F-8



                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 29, 2003
                                   (unaudited)

       Business Segment Profit (in thousands):



                                                     Three Months Ended
                                             -----------------------------------
                                                  March 29,        March 30,
                                                   2003              2002
                                             -----------------------------------
                                                                   
                Rendering                              $  4,812          $  4,102
                Restaurant Services                       6,032             3,839
                Corporate                                (6,933)           (3,519)
                Interest Expense                           (492)           (3,885)
                                                       --------          --------
                Income from Continuing Operations      $  3,419        $      537
                                                        =======         =========



       Certain assets are not  attributable  to a single  operating  segment but
       instead relate to multiple operating segments operating out of individual
       locations. These assets are utilized by both the Rendering and Restaurant
       Services  business  segments and are identified in the category  Combined
       Rendering/Restaurant      Services.      Depreciation     of     Combined
       Rendering/Restaurant  Services assets is allocated based upon an estimate
       of the percentage of corresponding  activity  attributed to each segment.
       Additionally,  although  intangible  assets are  allocated  to  operating
       segments,  the  amortization  related  to the  adoption  of "Fresh  Start
       Reporting" is not  considered in the measure of operating  segment profit
       (loss) and is included in Corporate Activities.

       Business Segment Assets (in thousands):



                                                        March 29,       December 28,
                                                          2003              2002
                                                    -----------------------------------
                                                                    
             Rendering                                  $  54,210         $  55,425
             Restaurant Services                           16,671            12,104
             Combined Rendering/Restaurant Services        63,318            62,744
             Corporate                                     24,355            32,639
                                                         --------          --------
             Total                                       $158,554          $162,912
                                                          =======           =======



(5)    Income Taxes

       The Company has provided  income taxes for the  three-month  period ended
       March 29, 2003,  based on its estimate of the  effective tax rate for the
       entire 2003 fiscal year.

       In  determining  whether  its  deferred  tax assets are more likely to be
       recoverable,  than not  recoverable,  the Company assessed its ability to
       carryback net operating losses, scheduled reversals of future taxable and
       deductible amounts, tax planning  strategies,  and the extent of evidence
       currently  available to support projections of future taxable income. The
       Company is unable to carryback any of its net operating losses and recent
       favorable operating results do not provide sufficient historical evidence
       at this time of sustained  future  profitability  sufficient to result in
       taxable  income  against  which the net  operating  losses can be carried
       forward and utilized.

(6)    Recapitalization

       On May 13, 2002, the Company consummated a recapitalization  and executed
       a new amended and restated Credit Agreement with its lenders.

       The Credit  Agreement  reflects the effect of applying the  provisions of
       Statement of Financial Accounting Standards No. 15, Accounting by Debtors
       and  Creditors  for Troubled  Debt  Restructurings  ("SFAS 15").  SFAS 15
       requires that the previously  existing amount of debt owed by the Company
       to the  lenders  be  reduced  by the fair  value of the  equity  interest
       granted  and  that no  gain  from  restructuring  the  Company's  debt be
       recognized.  As a result,  the carrying  amount of the term loan of $62.5
       million exceeds its contractual  amount of $52.3 million by $10.2 million
       at March 29, 2003.  Interest expense on the remaining


                                      F-9


                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 29, 2003
                                   (unaudited)


       carrying amount of debt reported in our financial  statements is based on
       a new effective  interest rate (0.20% at March 29, 2003) that equates the
       present  value of the future cash  payment  specified by the new terms of
       the term loan with the carrying amount of the debt.

       In connection with the Company's  recapitalization and its entry into the
       Credit Agreement,  the Company exchanged borrowings outstanding under its
       previous  Credit  Agreement,  a  portion  of  the  accrued  interest  and
       commitment  fees, and forbearance  fees payable for 46,705,086  shares of
       newly  issued  common  stock,  equal to 75% of the  Company's  then total
       outstanding  common stock on a fully  diluted  basis  (exclusive of stock
       options  issued and  outstanding),  and 100,000  shares of 6%  cumulative
       redeemable Series A Preferred Stock with a liquidation preference of $100
       per share and a face value of $10.0  million,  recorded  at a discount of
       approximately   $1.9   million,   resulting  in  a  yield  of  10%  which
       approximated the market yield at the date of issue. The term loan and the
       revolving  credit  facility  (under which there were no borrowings at the
       date of the recapitalization) mature on May 10, 2007.

       The Company's  Credit  Agreement  consists of the  following  elements at
       March 29, 2003 (in thousands):

                 Term loan:
                      Contractual amount                              $  52,266
                      SFAS 15 effect                                     10,187
                                                                       --------
                      Carrying amount                                 $  62,453
                                                                       ========

                 Revolving credit facility:
                      Maximum availability                            $  17,337
                      Borrowings outstanding                                  -
                      Letters of credit issued                            8,950
                                                                      ---------
                      Availability                                   $    8,387
                                                                      =========


       Substantially  all assets of the Company are either  pledged or mortgaged
       as  collateral  for  borrowings  under the Credit  Agreement.  The Credit
       Agreement  contains  certain  terms and  covenants,  which,  among  other
       matters, restrict the incurrence of additional indebtedness,  the payment
       of cash  dividends,  the  retention  of  certain  proceeds  from sales of
       assets, and the annual amount of capital  expenditures,  and requires the
       maintenance of certain minimum financial ratios. As of March 29, 2003, no
       cash dividends  could be paid to the Company's  stockholders  pursuant to
       the Credit Agreement.

       (7)    Derivative Instruments

       The Company makes limited use of  derivative  instruments  to manage cash
       flow risks  related to natural  gas  expense.  The  Company  does not use
       derivative instruments for trading purposes.

       Through March 29, 2003,  the Company had forward  purchase  agreements in
       place for purchases of approximately  $2.1 million of natural gas for the
       period April through May, 2003,  which  approximates 62% of the Company's
       usage for this period. These agreements have no net settlement provisions
       and the  Company  intends to take  physical  delivery,  which it has done
       under  similar  forward  purchase  agreements  during Fiscal 2002 and the
       first three months of Fiscal 2003.  Accordingly,  the  agreements are not
       subject to the  requirements  of SFAS 133 because  they qualify as normal
       purchases as defined in the standard.

       (8)    Comprehensive Income

       The Company  follows the provisions of Statement of Financial  Accounting
       Standards No. 130, Reporting  Comprehensive Income ("SFAS 130"). SFAS 130
       establishes  standards for reporting and  presentation  of  comprehensive
       income or loss and its  components.  In  accordance  with  SFAS 130,  the
       Company has presented the components of  comprehensive  income or loss in
       its consolidated balance sheets.


                                      F-10



                  DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)
                                 March 29, 2003
                                   (unaudited)


       (9)   Revenue Recognition

       The Company recognizes revenue on sales when products are shipped and the
       customer takes  ownership and assumes risk of loss.  Collection  fees are
       recognized in the month the service is provided.

       (10)  Assets Held for Sale

       Assets held for sale consist of the following (in thousands):


                                        March 29, 2003    December 28, 2002
                                       ---------------------------------------
                Petaluma, CA                $   497           $   497
                Billings, MT                    421               421
                Goldsboro, NC                    50                50
                Shelbyville, IN                  60                 -
                                            -------          --------
                                             $1,028           $   968
                                              =====            ======

       Assets held for sale are carried at the lower of cost,  less  accumulated
       depreciation or fair value. The assets are expected to be sold within the
       next 12 months.  These  assets  were  previously  utilized  in  rendering
       operations.   From  time  to  time,  the  Company  receives  offers  from
       prospective  buyers of Company  assets.  Until the offers  meet  criteria
       established by SFAS 144, the assets remain classified as property,  plant
       and equipment.  The book value of the Company's Shelbyville,  IN location
       was included in operating property and equipment at December 29, 2002.

       (11)     Discontinued Operations

       On October 18, 2002,  the Company sold the Company's  Linkwood,  Maryland
       rendering plant to a third party purchaser for cash consideration of $4.3
       million,  net of applicable costs of selling the plant location.  Results
       of  operations  of the  Linkwood  facility  were  previously  included in
       results of the Company's Rendering segment, and have been reclassified to
       Discontinued  Operations in the accompanying  consolidated  statements of
       operations. Revenues, costs and expenses, net of applicable taxes, of the
       plant are as follows (in thousands):




                                                                           Three Months Ended
                                                                ------------------------------------------
                                                                      March 29,            March 30,
                                                                         2003                2002
                                                                ------------------------------------------
                                                                                   
                                                                     $    -              $ 3,280
            Revenue

            Cost of sales and operating expenses                          -                2,862
            Selling, general and administrative                           -                   67
            Depreciation and amortization                                 -                  305
                                                                     ------              -------

            Total costs and expenses                                      -                3,234
            Operating and pretax income, now classified as
                income from discontinued operations                       -                   46
            Income taxes                                                  -                    -
                                                                      -----             --------
            Income from discontinued operations, net of tax          $    -             $     46
                                                                      =====              =======



                                      F-11



                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Darling International Inc.:

We have audited the consolidated  financial statements of Darling  International
Inc. and  subsidiaries as listed in the  accompanying  index. In connection with
our audits of the consolidated  financial  statements,  we also have audited the
financial  statement  schedule  as  listed  in  the  accompanying  index.  These
consolidated  financial  statements  and  financial  statement  schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  and  financial  statement
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,   in  all  material   respects,   the  financial   position  of  Darling
International  Inc.  and  subsidiaries  as of December 28, 2002 and December 29,
2001,  and the results of their  operations and their cash flows for each of the
years in the  three-year  period ended  December 28, 2002,  in  conformity  with
accounting  principles generally accepted in the United States of America.  Also
in our opinion,  the related financial  statement  schedule,  when considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
presents fairly, in all material respects, the information set forth therein.

As discussed in Note 1 to the  consolidated  financial  statements,  the Company
changed  its  method  of  accounting  for  derivative  instruments  and  hedging
activities in 2001,  and its method of accounting for and reporting of disposals
of long-lived assets and discontinued operations in 2002.


                                                     KPMG LLP


Dallas, Texas
March 10, 2003


                                      F-12





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                     December 28, 2002 and December 29, 2001
                 (in thousands, except share and per share data)

                                                                                      

                                                                          December 28,    December 29,
ASSETS (Notes 2 and 9)                                                        2002             2001
----------------------
                                                                         -------------    -------------
Current assets:
       Cash and cash equivalents                                          $  15,537         $  3,668
       Accounts receivable, less allowance for bad debts of $628
             at December 28, 2002 and $467 at December 29, 2001              24,099           23,719
       Inventories (Note 3)                                                   7,006            7,698
       Prepaid expenses                                                       4,975            4,394
       Deferred income taxes (Note 11)                                        3,659            2,203
       Assets held for sale (Note 5)                                            968                -
       Other (Note 1)                                                            63              209
                                                                           --------         --------
                      Total current assets                                   56,307           41,891

Property, plant and equipment, net (Note 4)                                  72,954           74,744
Collection routes and contracts, less accumulated amortization of
        $23,956 at Dec. 28, 2002 and $22,139 at Dec. 29, 2001                23,088           27,366
Goodwill, less accumulated amortization of $1,077 at
       December 28, 2002 and December 29, 2001                                4,429            4,429
Deferred loan costs                                                           3,822                -
Assets held for sale (Note 5)                                                     -            3,002
Other assets (Note 6)                                                         2,312            7,647
                                                                           --------         --------
                                                                           $162,912         $159,079
                                                                           ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
       Current portion of long-term debt (Note 9)                          $  8,372         $120,053
       Accounts payable, principally trade                                    9,902           11,104
       Accrued expenses (Note 7)                                             28,567           24,069
       Accrued interest                                                         314            3,383
                                                                           --------         --------
                      Total current liabilities                              47,155          158,609

Long-term debt, net (Note 9)                                                 60,055                -
Other noncurrent liabilities (Note 10)                                        7,530            8,134
Deferred income taxes (Note 11)                                               3,659            1,990
                                                                           --------         --------
                      Total liabilities                                     118,399          168,733
                                                                           --------         --------

Redeemable preferred stock, $0.01 par value; 1,000,000 shares
       authorized, 100,000 shares outstanding (Note 2)                        8,599                -

Stockholders' equity (deficit) (Note 2 and 12):
       Common stock, $.01 par value; 100,000,000 shares authorized, 62,302,448
         and 15,589,362 shares issued and outstanding
         at December 28, 2002 and December 29, 2001, respectively               623              156
       Additional paid-in capital                                            74,747           35,235
       Treasury stock, at cost; 21,000 shares at December 28, 2002
               and December 29, 2001                                           (172)            (172)
       Accumulated comprehensive loss (Note 13)                              (3,907)            (533)
       Accumulated deficit                                                  (35,377)         (44,340)
                                                                           --------         --------
                      Total stockholders' equity (deficit)                   35,914           (9,654)
                                                                           --------         --------
Commitments and contingencies (Notes 8 and 16)
                                                                           $162,912         $159,079
                                                                           ========         ========

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-13







                                       DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                                          Consolidated Statements of Operations
                                           Three years ended December 28, 2002
                                          (in thousands, except per share data)

                                                                                               
                                                                 December 28,        December 29,        December 30,
                                                                     2002                2001                2000
                                                                ----------------    ----------------    ----------------

Net sales                                                           $262,236           $242,964            $229,273
                                                                    --------           --------            --------
Costs and expenses:
     Cost of sales and operating expenses                            194,559            185,019             177,638
     Selling, general and administrative expenses                     30,294             28,334              26,479
     Depreciation and amortization                                    16,426             24,898              26,859
                                                                    --------           --------           ---------
         Total costs and expenses                                    241,279            238,251             230,976
                                                                    --------           --------           ---------
         Operating income and (loss)                                  20,957              4,713              (1,703)
                                                                    --------           --------           ---------
Other income (expense):
     Interest expense                                                 (6,409)           (14,162)            (13,971)
     Other, net                                                        2,001             (1,656)               (187)
                                                                    --------           --------           ---------
         Total other income (expense)                                 (4,408)           (15,818)            (14,158)
                                                                    --------           --------           ---------

Income (loss) from continuing operations before income taxes          16,549            (11,105)            (15,861)
Income taxes (Note 11)                                                 7,183                  -                   -
                                                                    --------           ---------          ---------
     Income (loss) from continuing operations                          9,366            (11,105)            (15,861)

Loss from discontinued operations,  net of tax (Note 15)                (403)              (740)             (3,328)
                                                                    --------           --------           ---------

Net income (loss)                                                      8,963            (11,845)            (19,189)
         Preferred dividends and accretion                              (994)                 -                   -
                                                                    --------          ---------           ---------
     Net income (loss) applicable to common shareholders            $  7,969          $ (11,845)          $ (19,189)
                                                                    ========          =========           =========

Basic and diluted earnings (loss) per share:
         Continuing operations                                     $    0.19          $   (0.71)          $   (1.02)
         Discontinued operations                                       (0.01)             (0.05)              (0.21)
                                                                   ---------          ---------           ---------
                  Total                                            $    0.18          $   (0.76)          $   (1.23)
                                                                   =========          =========           =========

                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                      F-14







                                             DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                                           Consolidated Statements of Stockholders' Equity
                                                 Three years ended December 28, 2002
                                                  (In thousands, except share data)

                                                                                                  
                                              Common stock
                                          ------------------------
                                                                                                           Retained        Total
                                                                   Additional             Accumulated      earnings    stockholders'
                                             Number     $.01 par    Paid-in    Treasury  comprehensive    (accumulated      equity
                                           of shares     value      capital     stock       loss           deficit)       (deficit)
------------------------------------------------------------------------------------------------------------------------------------
Balances at January 1, 2000               15,568,362    $  156    $  35,235    $ (172)           -        $ (13,306)      $  21,913

Net loss                                           -         -            -         -            -          (19,189)        (19,189)
                                          ----------    ------     --------    ------       ------          -------      ----------

Balances at December 30, 2000             15,568,362    $  156     $ 35,235    $ (172)           -        $ (32,495)      $   2,724

Net loss                                           -         -            -         -            -          (11,845)        (11,845)

Minimum pension liability adjustment               -         -            -         -         (533)               -            (533)

Derivative transition adjustment
     (Note 1)                                      -         -            -         -        2,220                -           2,220

Net change arising from current
   period hedging transactions (Note 1)            -         -            -         -          376                -             376

Reclassifications of derivative hedging
    changes into earnings   (Note 1)               -         -            -         -       (2,596)               -          (2,596)

Total comprehensive loss                           -         -            -         -            -                -         (12,378)
                                          ----------    ------     --------   -------      -------        ---------      ----------

Balances at December 29, 2001             15,568,362    $  156     $ 35,235   $  (172)     $  (533)       $ (44,340)      $  (9,654)

Net income                                         -         -            -         -            -            8,963           8,963

Minimum pension liability adjustment               -         -            -         -       (3,374)               -          (3,374)
                                                                                                                         ----------
Total comprehensive income                         -         -            -         -            -                            5,589

Tax benefits relating to January 1,
     1994 valuation allowance                      -         -        2,247         -            -                -           2,247

Issuance of common stock                  46,713,086       467       38,259         -            -                -          38,726

Preferred stock - accretion                        -         -         (589)        -            -                -            (589)

Preferred stock -
   accumulative dividends                          -         -         (405)        -            -                -            (405)
                                          ----------    ------     --------   -------      -------        ---------      ----------
Balances at December 28, 2002             62,281,448    $  623     $ 74,747   $  (172)     $(3,907)       $ (35,377)     $   35,914
                                          ==========    ======     ========   =======      =======        =========      ==========

                                             The accompanying notes are an integral part
                                             of these consolidated financial statements.


                                                                 F-15







                                         DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                                            Consolidated Statements of Cash Flows
                                             Three years ended December 28, 2002
                                                        (in thousands)

                                                                                                   
                                                                   December 28,         December 29,         December 30,
                                                                       2002                 2001                 2000
                                                                  ----------------     ----------------     ----------------

Cash flows from operating activities:
     Income (loss) from continuing operations                       $    9,366             $(11,105)           $(15,861)
    Adjustments to reconcile loss from continuing operations to
          net cash provided by continuing operating activities:
               Depreciation and amortization                            16,426               24,898              26,859
               Deferred income tax expense (benefit)                     2,187                    -                   -
               Loss (gain) on sale of assets                            (1,563)                 (80)                144
               Changes in operating assets and liabilities:
                         Accounts receivable                              (380)              (1,882)             (4,850)
                         Inventories and prepaid expenses                  111                 (746)              2,246
                         Accounts payable and accrued expenses           4,050               (4,898)              3,070
                         Accrued interest                                2,262                  345               2,928
                         Other                                             806               (1,916)              1,084
                                                                     ---------            ---------           ---------
         Net cash provided by continuing operating activities           33,265                4,616              15,620
         Net cash provided by discontinued operations                      867                  996                 623
                                                                     ---------            ---------           ---------
               Net cash provided by operating activities                34,132                5,612              16,243
                                                                     ---------            ---------           ---------
Cash flows from investing activities:
     Capital expenditures                                              (13,433)              (8,847)             (7,287)
     Gross proceeds from sale of property, plant and equipment,
          assets held for disposition and other assets                   6,011                  145               4,412
     Payments related to routes and other intangibles                        -                 (279)               (636)
     Net cash used in discontinued operations                             (654)                (295)               (397)
                                                                     ---------            ---------           ---------
               Net cash used in investing activities                    (8,076)              (9,276)             (3,908)
                                                                     ---------            ---------           ---------

Cash flows from financing activities:
     Proceeds from long-term debt                                      203,673              208,387             171,351
     Payments on long-term debt                                       (214,500)            (197,862)           (179,842)
     Contract payments                                                    (459)              (3,368)             (2,163)
     Recapitalization costs                                             (2,901)              (3,334)                  -
                                                                     ---------            ---------           ---------
               Net cash provided by (used in) financing
                 activities                                            (14,187)               3,823             (10,654)
                                                                     ---------            ---------           ---------


Net increase (decrease) in cash and cash equivalents                    11,869                  159               1,681

Cash and  cash equivalents at beginning of year                          3,668                3,509               1,828
                                                                     ---------            ---------           ---------
Cash and cash equivalents at end of year                             $  15,537            $   3,668           $   3,509
                                                                     =========            =========           =========

Supplemental disclosure of cash flow information:
        Cash paid during the year for:
          Interest                                                  $    3,740            $  13,817           $   9,161
                                                                     =========            =========           =========
          Income taxes, net of refunds                              $    2,103            $    (141)          $  (1,777)
                                                                     =========            =========           =========

Noncash financing activity - Recapitalization transactions
(Note 2):
     Debt reduction                                                  $ (39,986)                   -                   -
     Accrued interest reduction                                         (5,331)                   -                   -
     Forbearance fees reduction                                         (3,855)                   -                   -
     Preferred stock, net of discount                                    8,072                    -                   -
     Common stock issued                                                41,100                    -                   -

                                         The accompanying notes are an integral part
                                          of these consolidated financial statements

                                                             F-16





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

(1)  GENERAL

     (a) NATURE OF OPERATIONS

         Darling  International  Inc.  (the  "Company")  is a  recycler  of food
         processing  by-products  in the  United  States,  operating  a fleet of
         vehicles, through which it collects animal by-products and used cooking
         oil from food service  establishments,  butcher shops,  grocery stores,
         and independent  meat and poultry  processors  nationwide.  The Company
         processes raw  materials  through  facilities  located  throughout  the
         United  States into finished  products,  such as tallow,  protein,  and
         yellow grease. The Company sells its finished products domestically and
         internationally to producers of soap,  cosmetics,  rubber, pet food and
         livestock feed for use as ingredients in such products.

         On October 22, 1993,  the Company  entered into a settlement  agreement
         approved by the U.S.  District Court providing for a restructure of the
         Company's debt and equity and resolution of a class action lawsuit (the
         "Settlement").  The  terms  of  the  settlement  were  tantamount  to a
         prepackaged  bankruptcy  despite the  settlement  not  occurring  under
         Chapter 11 of the Bankruptcy Code. On December 29, 1993, the Settlement
         was  consummated  and became binding on all original  noteholders.  The
         Company has accounted for the Settlement  using "Fresh Start Reporting"
         as of January 1, 1994, in accordance  with  Statement of Position 90-7,
         "Financial  Reporting  by Entities in  Reorganization  Under the United
         States  Bankruptcy Code" issued by the American  Institute of Certified
         Public  Accountants.  Using a valuation of the Company  performed by an
         independent appraiser,  the Company determined the total reorganization
         value of all its assets to be approximately  $236,294,000 as of January
         1, 1994,  and the Company's  accumulated  deficit was  eliminated as of
         January 1, 1994.

       In May, 2002 the Company completed a recapitalization. See Note 2 below.

     (b) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (1)  Basis of Presentation

              The consolidated  financial statements include the accounts of the
              Company  and  its  subsidiaries.   All  significant   intercompany
              balances and transactions  have been eliminated in  consolidation.
              As  disclosed  in  Note  15,  the  operations  of  IPC  and of the
              Linkwood,  MD  facility,  as  defined  below,  are  classified  as
              discontinued operations.

         (2)  Fiscal Year

              The Company  has a 52/53 week  fiscal year ending on the  Saturday
              nearest December 31. Fiscal years for the  consolidated  financial
              statements included herein are for the 52 weeks ended December 28,
              2002,  the 52 weeks  ended  December  29,  2001 , and the 52 weeks
              ended December 30, 2000.

         (3)  Inventories

              Inventories  are  stated at the lower of cost or  market.  Cost is
              determined using the first-in, first-out (FIFO) method.

         (4)  Property, Plant and Equipment

              Property,  plant and equipment are recorded at cost.  Depreciation
              is computed by the straight-line  method over the estimated useful
              lives of assets: 1) Buildings and improvements, 24 to 30 years; 2)
              Machinery and  equipment,  3 to 8 years;  and 3) Vehicles,  4 to 6
              years.

              Maintenance  and repairs  are  charged to expense as incurred  and
              expenditures for major renewals and improvements are capitalized.


                                      F-17




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         (5)  Collection Routes and Contracts

              Collection  routes consist of groups of suppliers of raw materials
              in  similar  geographic  areas  from  which  the  Company  derives
              collection  fees,  and a dependable  source of raw  materials  for
              processing into finished products. Restrictive covenants represent
              non-compete  agreements with former  competitors  whose businesses
              were  acquired.  Amortization  is  computed  by the  straight-line
              method over the following  periods:  1) Collection routes, 8 to 15
              years; and 2) Restrictive covenants, 3 to 10 years.

         (6)  Goodwill and Other Intangible Assets

              The Company  adopted  SFAS 142 on December 30, 2001 (the first day
              of Fiscal 2002).  SFAS 142 eliminates the amortization of goodwill
              and other  intangible  assets with  indefinite  lives.  Intangible
              assets with lives restricted by contractual, legal, or other means
              will continue to be amortized  over their useful  lives.  Goodwill
              and other intangible assets not subject to amortization are tested
              for impairment annually or more frequently if events or changes in
              circumstances indicate that the asset might be impaired.  SFAS 142
              requires a two-step  process for testing  impairment.  First,  the
              fair value of each  reporting  unit is  compared  to its  carrying
              value to determine whether an indication of impairment  exists. If
              impairment  is  indicated,  then the fair  value of the  reporting
              unit's  goodwill is determined by allocating the unit's fair value
              of  its  assets  and  liabilities   (including  any   unrecognized
              intangible assets) as if the reporting unit had been acquired in a
              business  combination.  The amount of  impairment  for goodwill is
              measured as the excess of its carrying  value over its fair value.
              The Company has determined  that the implied value of its goodwill
              exceeded  carrying value, and therefore,  no impairment charge was
              necessary.

              The Company has  identified  its  reporting  units for purposes of
              assessing   goodwill   impairment  to  be  the  individual   plant
              locations.  Intangible  assets subject to amortization  under SFAS
              142 consist of collection  routes and  contracts  and  non-compete
              agreements.   Amortization   expense  is   calculated   using  the
              straight-line  method over the estimated  useful life of the asset
              ranging from 3 to 15 years.

              The gross carrying  amount of collection  routes and contracts and
              non-compete   agreements  subject  to  amortization   include  (in
              thousands):



                                                                                             
                                                                             December 28,       December 29,
                                                                                2002                2001
                                                                          --------------------------------------
                           Collection Routes and Contracts:
                                Routes                                         $  42,302             $  42,307
                                Non-compete agreements                             4,428                 6,797
                                Royalty and consulting agreements                    314                   401
                                                                               ---------             ---------
                                                                                  47,044                49,505
                           Accumulated Amortization:
                                Routes                                           (20,865)              (17,498)
                                Non-compete agreements                            (2,903)               (4,423)
                                Royalty and consulting agreements                   (188)                 (218)
                                                                               ---------             ---------
                                                                                 (23,956)              (22,139)
                                                                               ---------             ---------
                           Collection routes and contracts,
                                less accumulated amortization                  $  23,088             $  27,366
                                                                               =========             =========


              Amortization  expense for the three years ended December 28, 2002,
              December 29,  2001,  and  December  30,  2000,  was  approximately
              $4,280,000, $5,014,000 and $5,498,000, respectively.  Amortization
              expense  for  the  next  five  fiscal  years  is  estimated  to be
              $4,196,000, $3,999,000, $3,889,000, $3,841,000 and $3,413,000.

              The  Company  has also  recorded an  intangible  asset  related to
              unrecognized  prior service  costs in connection  with its minimum
              pension liability as discussed in Note 13.

              The effect of the  adoption  of SFAS 142 on net income  (loss) and
              earnings (loss) per share follows (in thousands,  except per share
              date):


                                      F-18



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)


                                                                                            
                                                                                  Fiscal Year Ended
                                                                  --------------------------------------------------
                                                                    December 28,    December 29,     December 30,
                                                                        2002            2001             2000
                                                                  --------------------------------------------------
                        Reported net income (loss) applicable to
                           common shareholders                        $7,969         $(11,845)       $(19,189)
                        Add back:  goodwill amortization                   -              242             142
                                                                      ------         --------        --------
                        Adjusted net income (loss) applicable to
                           common shareholders                        $7,969         $(11,603)       $(19,047)
                                                                      ======         ========        ========

                        Basic earnings (loss) per share:
                        Reported net income (loss)                    $ 0.18          $ (0.76)        $ (1.23)
                        Add back:  goodwill amortization                   -             0.02            0.01
                                                                      ------         --------         -------
                        Adjusted net income (loss)                    $ 0.18          $ (0.74)         $(1.22)
                                                                      ======         ========         =======


         (7)  Environmental Expenditures

              Environmental   expenditures   incurred  to  mitigate  or  prevent
              environmental  contamination  that  has  yet  to  occur  and  that
              otherwise  may result  from  future  operations  are  capitalized.
              Expenditures  that relate to an existing  condition caused by past
              operations  and  that  do not  contribute  to  current  or  future
              revenues are expensed or charged against established environmental
              reserves.  Reserves are established when environmental assessments
              and/or  clean-up  requirements  are  probable  and the  costs  are
              reasonably estimable.

         (8)  Income Taxes

              The  Company  accounts  for  income  taxes  using  the  asset  and
              liability method.  Under the asset and liability method,  deferred
              tax  assets  and  liabilities  are  recognized  for the future tax
              consequences  attributable  to  differences  between the financial
              statement  carrying amounts of existing assets and liabilities and
              their  respective tax bases.  Deferred tax assets and  liabilities
              are measured  using enacted tax rates expected to apply to taxable
              income  in the  years in which  those  temporary  differences  are
              expected to be  recovered  or settled.  The effect on deferred tax
              assets and  liabilities  of a change in tax rates is recognized in
              income in the period that includes the enactment date.

         (9)  Net Income (Loss) Per Common Share

              Basic  income  (loss) per common share is computed by dividing net
              earnings or loss  attributable to outstanding  common stock by the
              weighted  average number of common shares  outstanding  during the
              year.  Diluted  income  (loss) per  common  share is  computed  by
              dividing net earnings or loss  attributable to outstanding  common
              stock by the weighted average number of common shares  outstanding
              during the year  increased by dilutive  common  equivalent  shares
              (stock options) determined using the treasury stock method,  based
              on the average  market price  exceeding the exercise  price of the
              stock options.

              The weighted  average  common  shares used for basic income (loss)
              per common share was  45,003,008,  15,568,362  and  15,568,362 for
              2002,  2001 and 2000,  respectively.  The weighted  average common
              shares  used for  diluted  income  (loss)  per  common  share  was
              45,577,262,  15,568,362,  and 15,568,362 for 2002,  2001 and 2000,
              respectively. The numbers of shares for 2000 have been reduced for
              21,000 treasury shares from numbers previously reported, which did
              not effect  previously  reported  earnings per share. For 2001 and
              2000 the effect of all outstanding stock options was excluded from
              diluted   loss  per   common   share   because   the   effect  was
              anti-dilutive.

              For Fiscal 2002, 2001 and 2000, respectively, 1,637,430, 3,025,865
              and 2,334,380 outstanding stock options were excluded from diluted
              income (loss) per common share as the effect was antidilutive.

                                      F-19




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         (10) Stock Option Plans

              The Company  accounts for its stock option plan in accordance with
              the provisions of Accounting  Principles Board ("APB") Opinion No.
              25,  Accounting  for  Stock  Issued  to  Employees,   and  related
              interpretations.  As such, compensation expense is recorded on the
              date of grant only if the current  market price of the  underlying
              stock   exceeds  the  exercise   price.   Statement  of  Financial
              Accounting  Standards ("SFAS") No. 123, Accounting for Stock-Based
              Compensation,  permits  entities to  recognize as expense over the
              vesting  period  the fair value of all  stock-based  awards on the
              date of grant.  Alternatively,  SFAS No.  123 allows  entities  to
              continue to apply the provisions of APB Opinion No. 25 and provide
              pro forma net income and pro forma earnings per share  disclosures
              for employee  stock option grants made in 1995 and future years as
              if the  fair-value-based  method  defined in SFAS No. 123 had been
              applied.  The  Company  has  elected  to  continue  to  apply  the
              provisions  of APB  Opinion  No.  25 and  provide  the  pro  forma
              disclosure provisions of SFAS No. 123.

              The following  table  illustrates  the effect on net income (loss)
              and income  (loss) per share if the fair  value  based  method had
              been  applied  to all  outstanding  and  invested  awards  in each
              period.


                                                                                          
                                                       December 28,            December 29,             December 30,
                                                           2002                    2001                     2000
                                                  ----------------------- ------------------------ ------------------------
                                                    amount    per share     amount     per share     amount     per share
                                                  ----------- ----------- ------------ ----------- ------------ -----------
              Reported net income (loss)
                  applicable to common
                  shareholders                    $7,969      $0.18       $(11,845)    $(0.76)     $(19,189)    $(1.23)
              Deduct total stock-based employee
                  compensation expense
                  determined under
                  fair-value-based method for
                  all rewards, net of tax           (127)     (0.01)          (287)     (0.02)       (1,226)     (0.08)
                                                   -----      -----       --------     ------      --------     ------

                  Pro forma                       $7,842      $0.17       $(12,132)    $(0.78)     $(20,415)    $(1.31)
                                                  ======      =====       ========     ======      ========     ======



         (11) Statements of Cash Flows

              The Company  considers all short-term  highly liquid  instruments,
              with an  original  maturity  of three  months or less,  to be cash
              equivalents.

         (12) Use of Estimates

              The  preparation  of  the  consolidated  financial  statements  in
              conformity with accounting  principles  generally  accepted in the
              United States of America requires management to make estimates and
              assumptions  that  affect  the  reported  amounts  of  assets  and
              liabilities and disclosure of contingent assets and liabilities at
              the date of the consolidated financial statements and the reported
              amounts of revenues  and  expenses  during the  reporting  period.
              Actual results could differ from those estimates.

                                      F-20



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         (13) Impairment  of  Long-Lived  Assets  and  Long-Lived  Assets  To Be
              Disposed Of

              Effective  December 30, 2001 (the first day of Fiscal  2002),  the
              Company adopted  Statement of Financial  Accounting  Standards No.
              144,  Accounting  for the  Impairment  of Disposal  of  Long-Lived
              Assets (SFAS 144).  SFAS 144 supercedes  SFAS 121,  Accounting for
              the  Impairment  of Long Lived Assets and for Long Lived Assets to
              be Disposed Of, and the  accounting  and  reporting  provisions of
              Accounting  Principles Board Opinion No. 30, Reporting the Results
              of Operations, Reporting the Effects of Disposal of a Segment of a
              Business,  and Extraordinary,  Unusual and Infrequently  Occurring
              Events  and   Transactions.   SFAS  144  retains  the  fundamental
              provisions of SFAS 121 but eliminates the  requirement to allocate
              goodwill to long-lived  assets to be tested for  impairment.  SFAS
              144 also  requires  discontinued  operations  to be carried at the
              lower of cost or fair  value  less  costs to  sell,  broadens  the
              presentation of discontinued  operations to include a component of
              an entity  rather than a segment of a business,  and  requires the
              classification  of prior year  operating  results of  discontinued
              operations  to be consistent  with the current year  presentation.
              The  adoption  of  SFAS  144  resulted  in   reclassification   of
              approximately  $335,000 and $1,700,000 of assets held for sale, to
              property  held for use during the  second  and third  quarters  of
              2002, respectively,  as management did not believe a sale of these
              assets  was  probable  within  the  next 12  months.  Depreciation
              expense on these  assets of  approximately  $312,000  was recorded
              during the third quarter of 2002, which would have been recognized
              had these assets been continuously classified as held and used, in
              accordance with SFAS 144. During the third quarter of Fiscal 2002,
              the Company also  recorded an impairment  charge of  approximately
              $435,000 to reduce to fair value the carrying  value of the assets
              at the Company's  Linkwood,  Maryland  rendering plant,  which was
              sold on October  18,  2002,  to a third party  purchaser  for cash
              consideration  of  $4.3  million,   and  is  accounted  for  as  a
              discontinued operation.

              Prior to Fiscal 2002,  the Company  applied the provisions of SFAS
              No. 121,  Accounting  for  Impairment  or  Disposal of  Long-Lived
              Assets.

              The Fiscal 2002 impairment  charge of $435,000  pertains to assets
              held for sale (see  Note 5) in the  Company's  Rendering  business
              segment at the Company's Linkwood,  MD facility which is accounted
              for  as  a  discontinued  operation.  The  impairment  charge  was
              necessary  to  reduce  the  carrying  value  of  these  assets  to
              management's estimate of their net realizable value. Estimated net
              realizable  value was based upon the sales price received from the
              third party purchaser.  A summary of the impairment charge follows
              (in thousands):

                             Land                                   $200
                             Leaseholds and buildings                235
                                                                     ---
                                  Total impairment                  $435
                                                                     ===

                                      F-21





                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

              The Fiscal 2001 impairment  charge of $840,000  pertains solely to
              assets  held  for sale  (see  Note 5) in the  Company's  Rendering
              business  segment.  The impairment  charge was necessary to reduce
              the  carrying  value of these assets to  management's  estimate of
              their  net   realizable   value  in  light  of  current   economic
              conditions.   Estimated  net  realizable   values  were  based  on
              information  from  business  and real estate  brokers,  comparable
              sales,  property  tax  valuations  and internal  discussions  with
              Company  employees  working  in  the  geographic  areas  who  were
              familiar  with the specific  assets.  A summary of the  impairment
              charge follows (in thousands):

                      Land                                          $106
                      Leaseholds and buildings                       134
                      Equipment and furniture                        600
                           Total impairment                         $840
                                                                     ===

              The Fiscal 2000  impairment  charge of $4,016,000  consists of: 1)
              $162,000  and $375,000  related to  Restaurant  Services  business
              segment  equipment  and  allocable  goodwill,   respectively;   2)
              $1,341,000  related  to  assets  held  for  sale in the  Company's
              Rendering business segment; and 3) $293,000 and $1,341,000 related
              to  buildings  and  equipment,   respectively,  at  the  Company's
              Linkwood,  MD facility,  which is accounted for as a  discontinued
              operation.  The impairment charges of the assets in operation were
              made to reduce the carrying value to estimated fair value based on
              the  discounted  future cash flows of the assets.  The  impairment
              charges of the assets held for sale and the discontinued operation
              were  necessary  to reduce the  carrying  value of these assets to
              management's  estimate  of their  net  realizable  value  based on
              information  from a business  broker.  A summary of the impairment
              charges follows (in thousands):



                                                                                                   
                                                       Discontinued                         Restaurant
                                                        Operations        Rendering          Services           Total
                                                      ---------------- ----------------- ----------------- ----------------
                      Leaseholds and buildings           $    293          $   349          $     -            $   642
                      Equipment and furniture               1,845              992              162              2,999
                      Goodwill                                  -                -              375                375
                                                         --------         --------          -------            -------
                           Total impairment              $  2,138          $ 1,341          $   537            $ 4,016
                                                         ========         ========          =======            =======




         (14) Financial Instruments

              The  carrying  amount  of  cash  and  cash  equivalents,  accounts
              receivable,  accounts  payable and accrued  expenses  approximates
              fair value due to the short maturity of these instruments.

              The  carrying  amount  (exclusive  of the effect of SFAS No. 15 in
              Fiscal 2002) of the  Company's  outstanding  borrowings  under the
              Credit  Agreement and Term Loan described in Note 9,  approximates
              the  fair  value  due  to  the  floating  interest  rates  on  the
              borrowings.

              The  fair  value  of  the  interest  rate  swap  agreements  was a
              liability  of  $1,020,000  at December 29,  2001.  Current  market
              pricing  models were used to estimate  fair value of interest rate
              swap agreements. See Note 9.

                                      F-22



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)


         (15) Derivative Instruments

              The Company makes limited use of derivative  instruments to manage
              cash flow risks  related to  interest  and  natural  gas  expense.
              Interest  rate swaps are entered  into with the intent of managing
              overall  borrowing  costs.  The  Company  does not use  derivative
              instruments for trading purposes.

              Effective  December 31, 2000 (the first day of Fiscal  2001),  the
              Company  adopted the  provisions of SFAS No. 133,  Accounting  for
              Derivative  Instruments  and Hedging  Activities  SFAS No. 133, as
              amended,  standardizes the accounting for derivatives instruments,
              including  certain  derivative   instruments   embedded  in  other
              contracts. Under the standard, entities are required to report all
              derivative  instruments in the statement of financial  position at
              fair value.  The  accounting  for changes in the fair value (i.e.,
              gains or losses) of a derivative  instrument depends on whether it
              has  been   designated   and   qualifies  as  part  of  a  hedging
              relationship and, if so, on the reason for holding the instrument.
              If certain  conditions are met,  entities may elect to designate a
              derivative  instrument  as a hedge of exposures to changes in fair
              value, cash flows, or foreign currencies. The Company held no fair
              value hedge or foreign  currency hedge  derivative  instruments at
              December 29, 2001 or December 28, 2002. If the hedged  exposure is
              a cash flow exposure, the effective portion of the gain or loss on
              the derivative  instrument is reported initially as a component of
              other   comprehensive   income   (outside  of  earnings)   and  is
              subsequently   reclassified  into  earnings  when  the  forecasted
              transaction  affects  earnings.  Any  amounts  excluded  from  the
              assessment  of  hedge  effectiveness  as well  as the  ineffective
              portion of the gain or loss are reported in earnings  immediately.
              If the  derivative  instrument is not  designated as a hedge,  the
              gain or loss is  recognized  in  earnings in the period of change.
              Upon  adoption,  the  provisions  of Statement 133 must be applied
              prospectively.

              Upon  adoption of SFAS No. 133 on December 31,  2000,  the Company
              was party to  interest  rate and  natural  gas swaps to manage the
              risk of  changes  in cash flows  related  to  interest  expense on
              floating-rate  borrowings  under  its  Credit  Agreement  and  the
              purchase of natural gas used in its plants.

              At December 30, 2000, the Company was party to three interest rate
              swap agreements whereby the interest  obligation on $70 million of
              floating-rate  debt has been  exchanged  for fixed rate  contracts
              which bear interest, payable quarterly. One swap agreement for $25
              million  matured June 27, 2002,  bore  interest at 6.5925% and the
              Company's  receive  rate was  based on the  three-month  LIBOR.  A
              second swap agreement for $25 million  matured June 27, 2001, bore
              interest at 9.83% and the Company's  receive rate was based on the
              Base Rate. The third swap  agreement for $20 million  matured June
              27,  2002,  with a one-time  option for the bank to cancel at June
              27, 2001,  which the bank  declined to exercise,  bore interest at
              9.17% and the  Company's  receive rate was based on the Base Rate.
              The portion of the interest rate swap agreements  extending beyond
              June 30, 2001, the expiration  date of the Credit  Agreement,  was
              not considered a hedge.  The Company  recorded a liability of $0.5
              million at December 29, 2001,  with the related charge recorded in
              other  expense.  The  Company  continued  to follow this policy in
              Fiscal 2002. The Company accounted for the portion of the interest
              rate swaps  through  June 30, 2001 as cash flow  hedges.  The fair
              value of this portion of the swaps was a liability of $1.0 million
              at December 29, 2001.

                                      F-23


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

              At December 28, 2002, the Company has forward purchase  agreements
              with suppliers  obligating  the Company to purchase  approximately
              449,800  mmbtu's of natural  gas for the  period  January  through
              March, 2003, with a purchase price of $4.01/mmbtu.

              As  of  December  29,  2001,  the  Company  had  forward  purchase
              agreements  in place  for  purchases  of  approximately  1,500,000
              mmbtu's of natural gas for the period  January  through  December,
              2002, based on an average purchase price of $3.47/mmbtu.

              These  forward   purchase   agreements   have  no  net  settlement
              provisions and the Company takes physical  delivery,  which it had
              done under similar forward purchase  agreements from March through
              December 2001.  Accordingly,  the forward purchase  agreements are
              not  subject  to the  requirements  of SFAS No. 133  because  they
              qualify as normal purchases as defined in the standard.

              The Company has  designated the interest rate and natural gas swap
              agreements  as cash flow  hedges and such  agreements  qualify for
              hedge accounting under SFAS No. 133, except as described above for
              certain portions of two of the interest rate swaps.

              A  summary  of  the  transition   adjustment   recorded  to  other
              comprehensive   income,   the  net  change  arising  from  hedging
              transactions,  and the amounts  recognized in earnings  during the
              twelve-month   period   ended   December   29,  2001  follows  (in
              thousands):

                Transition  adjustment on December 31, 2000          $  2,220
                to accumulated
                other comprehensive income

                Net change arising from current period                    376
                hedging transactions

                Reclassifications  into earnings                       (2,576)
                                                                      -------
                Accumulated  other  comprehensive  loss at            $     -
                December 29, 2001                                     =======

              A summary of the gains and losses  recognized  in earnings  during
              the year ended December 29, 2001 follows (in thousands):

                Loss to interest  expense  related to interest        $  (487)
                rate swap agreements

                Gain to operating expenses related to natural           2,568
                gas swap agreements  (effective  portion)

                Gain to other income related to natural                   515
                gas swap  agreements  (ineffective  portion)          -------

                Total reclassifications  into  earnings  for          $ 2,596
                the  year  ended December 29, 2001

                                      F-24


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

              Gains and  losses  reported  in  accumulated  other  comprehensive
              income are  reclassified  into earnings upon the occurrence of the
              hedged  transactions  (accrual of interest expense and purchase of
              natural gas).  The entire  amount  reported in  accumulated  other
              comprehensive  income as of December  31, 2000  (transition),  was
              reclassified into earnings by the second quarter of Fiscal 2001.

              There was no income tax expense or benefit recorded related to the
              derivative transactions described above.

              For Fiscal 2000,  interest rate swaps were accounted for under the
              accrual method,  whereby the difference  between the Company's pay
              and  receive  rate was  recognized  as an  increase or decrease to
              interest expense.  The natural gas fixed for float swap agreements
              to which the  Company was party  during  Fiscal 2000 are traded on
              the NYMEX.  Realized  gains or losses from the settlement of these
              financial hedging  instruments were recognized as an adjustment of
              the cost of purchased  natural gas in the month of delivery during
              Fiscal  2000.  The gains or losses  realized  as a result of these
              Fiscal 2000 hedging  activities were  substantially  offset in the
              cash  market  when the hedged  natural  gas was  delivered  to the
              Company's facilities.

         (16) Comprehensive Income

              The Company  follows  the  provisions  of SFAS No. 130,  Reporting
              Comprehensive  Income.  SFAS No.  130  establishes  standards  for
              reporting  and  presentation  of  comprehensive   income  and  its
              components.  In  accordance  with SFAS No.  130,  the  Company has
              presented   the   components  of   comprehensive   income  in  its
              consolidated statement of stockholders' equity.

         (17) Revenue Recognition

              The Company  recognizes revenue on sales when products are shipped
              and the  customer  takes  ownership  and  assumes  risk  of  loss.
              Collection  fees  are  recognized  in the  month  the  service  is
              provided.

         (18) Reclassifications

              As required by SFAS 144, and as  discussed  in Notes  1(b)(13) and
              15, the prior years  results of  operations  of the  Linkwood,  MD
              facility,  which was sold in Fiscal 2002,  have been  reclassified
              and   reported   as   discontinued    operations   to   facilitate
              comparability  of reported  results of  operations.  Certain other
              immaterial  reclassifications  of amounts previously reported have
              been  made  to  the  Fiscal  2001  and  Fiscal  2000  consolidated
              financial statements to conform the presentation for each year.

                                      F-25




                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(2)      RECAPITALIZATION

         On May  13,  2002,  the  Company  consummated  a  recapitalization  and
         executed a new amended and restated Credit Agreement with its lenders.

         The new Credit Agreement reflects the effect of applying the provisions
         of Statement of Financial  Accounting  Standards No. 15,  Accounting by
         Debtors and Creditors for Troubled Debt Restructurings ("SFAS No. 15").
         SFAS No. 15 requires that the previously  existing  amount of debt owed
         by the  Company  to the  lenders  be  reduced  by the fair value of the
         equity  interest  granted  and  that no  gain  from  restructuring  the
         Company's bank debt be recognized.  As a result, the carrying amount of
         the debt of $68.4  million  exceeds  its  contractural  amount of $56.7
         million by $11.7 million at December 28, 2002.  Interest expense on the
         remaining carrying amount of debt reported in our financial  statements
         is based on a new effective  interest rate (0.20% at December 28, 2002)
         that equates the present value of the future cash payment  specified by
         the new terms of the term loan with the carrying amount of the debt.

         In connection  with the Company's  recapitalization  and its entry into
         the new Credit Agreement,  the Company exchanged borrowings outstanding
         under its previous Credit Agreement,  a portion of the accrued interest
         and commitment fees, and forbearance fees payable for 46,705,086 shares
         of newly issued common stock,  equal to 75% of the Company's then total
         outstanding  common stock on a fully diluted basis  (exclusive of stock
         options  issued and  outstanding),  and 100,000 shares of 6% cumulative
         redeemable  Series A Preferred  Stock with a liquidation  preference of
         $100  per  share  and a face  value  of $10.0  million,  recorded  at a
         discount of  approximately  $1.9 million,  resulting in a yield of 10%,
         which approximates the market yield at the date of issue. The term loan
         and the revolving credit facility mature on May 10, 2007.


              The  Company's  new Credit  Agreement  consists  of the  following
              elements at December 28, 2002 (in thousands):

                 Term loan:
                      Contractual amount                  $  56,655
                      SFAS 15 effect                         11,750
                                                           --------
                      Carrying amount                     $  68,405
                                                           --------
                 Revolving credit facility:
                      Maximum availability                $  17,300
                      Borrowings outstanding                      -
                      Letters of credit issued               11,687
                                                           --------
                      Availability                        $   5,613
                                                           ========

         Substantially all assets of the Company are either pledged or mortgaged
         as collateral for  borrowings  under the Credit  Agreement.  The Credit
         Agreement  contains  certain terms and  covenants,  which,  among other
         matters,  restrict  the  incurrence  of  additional  indebtedness,  the
         payment of cash dividends, the retention of certain proceeds from sales
         of assets, and the annual amount of capital expenditures,  and requires
         the maintenance of certain minimum financial ratios. As of December 28,
         2002, no cash  dividends  could be paid to the  Company's  stockholders
         pursuant to the Credit Agreement.

                                      F-26



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(3)      INVENTORIES

         A summary of inventories follows (in thousands):

                                                 December 28,     December 29,
                                                     2002             2001
                                              ----------------- ----------------
                Finished product                  $  5,084          $  6,117
                Supplies and other                   1,922             1,581
                                                   -------           -------
                                                  $  7,006          $  7,698
                                                   =======           =======


(4)      PROPERTY, PLANT AND EQUIPMENT

         A summary of property, plant and equipment follows (in thousands):

                                                   December 28,     December 29,
                                                       2002             2001
                                                 -------------------------------
                 Land                               $   9,193       $   9,454
                 Buildings and improvements            26,893          25,906
                 Machinery and equipment              139,065         139,248
                 Vehicles                              49,544          49,084
                 Construction in process                1,288           6,607
                                                    ---------       ---------
                                                      225,983         230,299
                 Accumulated depreciation             153,029         155,555
                                                    ---------       ---------
                                                    $  72,954       $  74,744
                                                    =========       =========


(5)      ASSETS HELD FOR SALE

         Assets held for sale consist of the following (in thousands):

                                                  December 28,      December 29,
                                                      2002              2001
                                                 -------------------------------
               Petaluma, CA                          $  497         $    497
               Billings, MT                             421              421
               Goldsboro, NC                             50               50
               Esteem (Norfolk, NE)                       -            1,200
               Peptide (Norfolk, NE)                      -              500
               West Point, NE                             -              118
               Lynchburg, VA                              -              100
               Shelbyville, IN                            -               62
               Zanesville, OH                             -               54
                                                      -----           ------
                                                     $  968          $ 3,002
                                                      =====           ======


         Under provisions of SFAS 144,  approximately  $2,035,000 of assets held
         for sale at December  29,  2001,  have been  reclassified  to property,
         plant and equipment in Fiscal 2002 because  management does not believe
         sale of the assets within one year is probable.

         The  remaining  assets  held for sale are carried at the lower of cost,
         less accumulated depreciation or fair value. The assets are expected to
         be sold within the next 12 months and,  accordingly,  are classified as
         current  assets at December  28,  2002.  These  assets were  previously
         utilized  in  rendering  operations.  From  time to time,  the  Company
         receives offers from  prospective  buyers of Company assets.  Until the
         offers meet criteria  established  by Statement  144, the assets remain
         classified as property, plant and equipment.


                                      F-27


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         As discussed in Note 1, the Company recorded impairment charges related
         to certain of the assets held for sale in Fiscal 2002,  Fiscal 2001 and
         Fiscal 2000. Impairment recorded on the Company's Linkwood, MD facility
         during  Fiscal 2002 is included in loss from  discontinued  operations.
         Included  in the  Fiscal  2002  and  2001  impairment  charges  are the
         following  amounts to reduce the carrying value of assets held for sale
         to estimated net realizable value (in thousands):


                                                 December 28,     December 29,
                                                     2002             2001
                                               ----------------- ---------------
                   Linkwood, MD                     $  435          $      -
                   Esteem                                -               210
                   Peptide                               -               439
                   Other assets                          -               191
                                                     -----             -----
                        Total                       $  435            $  840
                                                     =====             =====
(6)      OTHER ASSETS

         Other assets consist of the following (in thousands):


                                                                                        

                                                                    December 28,               December 29,
                                                                        2002                       2001
                                                               ----------------------- -----------------------------
                  Prepaid pension cost (Note 13)                      $      -                  $  2,359
                  Deposits and other                                     2,312                     1,526
                  Deferred recapitalization costs                            -                     3,762
                                                                       -------                   -------
                                                                      $  2,312                  $  7,647
                                                                       =======                   =======



(7)      ACCRUED EXPENSES

         Accrued expenses consist of the following (in thousands):


                                                                                            
                                                                               December 28,       December 29,
                                                                                   2002               2001
                                                                           --------------------- ----------------
               Compensation and benefits                                          $ 11,338          $  6,750
               Utilities and sewage                                                  2,428             3,944
               Accrued plant expenses                                                2,179             2,590
               Accrued forbearance fees                                                  -             2,570
               Insurance                                                             1,396             2,604
               Accrued freight cost                                                    899             1,208
               Accrued interest rate swap liability                                      -             1,020
               Accrued income, ad valorem, and franchise taxes                       2,424               888
               Reserve for self insurance, environmental and litigation
                    matters (Note 16)                                                5,407               599
               Non-compete agreements                                                  406               363
               Other accrued expense                                                 2,090             1,533
                                                                                  --------          --------
                                                                                  $ 28,567          $ 24,069
                                                                                  ========          ========


                                      F-28


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(8) LEASES

         The  Company  leases five  plants and  storage  locations,  four office
         locations and a portion of its transportation equipment under operating
         leases.  Leases are  noncancellable and expire at various times through
         the year 2028. Minimum rental commitments under  noncancellable  leases
         as of December 28, 2002, are as follows (in thousands):

                                Period Ending Fiscal        Operating Leases
                                --------------------        ----------------
                                        2003                        $  3,305
                                        2004                           2,729
                                        2005                           1,866
                                        2006                             922
                                        2007                             801
                                     Thereafter                        8,934
                                                                    --------
                                               Total                $ 18,557
                                                                    ========


         Rent expense for the years ended December 28, 2002,  December 29, 2001,
         and December 30, 2000 was $4.2 million,  $4.2 million and $3.2 million,
         respectively.

(9) DEBT

         Debt consists of the following (in thousands):

                                                  December 28,      December 29,
                                                       2002             2001
                                             -----------------------------------
          Credit Agreement:
          Revolving Credit Facility               $        -        $ 120,027
          Term Loan                                   68,405                -
          Other notes                                     22               26
                                                  ----------        ---------
                                                      68,427          120,053
          Less current maturities                      8,372          120,053
                                                  ----------        ---------
                                                  $   60,055        $       -
                                                  ==========        =========

         See Note 2 for a description of the Credit Agreement.


         Maturities of long-term debt at December 28, 2002 are as follows:


                                                                                       

                                             Contractual                  SFAS 15                    Total
                                             Debt Amount                  Effect                Carrying Amount
                                      -------------------------- -------------------------- -------------------------
          2003                                 $ 5,401                    $ 2,971                  $  8,372
          2004                                   3,000                      2,923                     5,923
          2005                                   4,800                      2,721                     7,521
          2006                                   4,800                      2,479                     7,279
          2007                                  38,676                        656                    39,332
                                                ------                     ------                    ------
                                               $56,677                    $11,750                   $68,427
                                                ======                     ======                    ======



                                      F-29


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)


         Under the terms of the new Credit  Agreement,  25% of the  excess  cash
         flow (as defined by the new Credit  Agreement) in Fiscal 2002 is due to
         the lenders in Fiscal 2003. Included in current maturities of long-term
         debt at December 28, 2002, is $4.2 million under this  provision of the
         Credit Agreement.  The percentage of excess cash flow, as defined,  due
         to the lenders for each fiscal year through Fiscal 2007 follows:

                                                                 Percentage of
          Fiscal Year(s)                                       Excess Cash Flow
                                                               ----------------
                   2002                                               25%
                   2003                                               35%
                   2004 and thereafter                                50%

         The excess cash flow  payment is due to the lenders the earlier of: the
         date of delivery of the Company's  annual  financial  statements to the
         lenders, or within 115 days of the end of the Company's fiscal year.

(10)     OTHER NONCURRENT LIABILITIES

         Other noncurrent liabilities consist of the following (in thousands):


                                                                                             

                                                                             December 28,          December 29,
                                                                                2002                    2001
                                                                       ---------------------------------------------
         Reserve for insurance, environmental, litigation and tax               $  7,020              $  7,184
              matters (Note 16)
         Liabilities associated with consulting and noncompete                       352                   758
              agreements
         Other                                                                       158                   192
                                                                                 -------               -------
                                                                                $  7,530              $  8,134
                                                                                 =======               =======


         The Company  sponsors a defined  benefit health care plan that provides
         postretirement   medical  and  life   insurance   benefits  to  certain
         employees.  The Company  accounts for this plan in accordance with SFAS
         No. 106 and the effect on the Company's  financial position and results
         of operations is immaterial.

(11)     INCOME TAXES

         Income  tax  expense  (benefit)  attributable  to  income  (loss)  from
         continuing operations before income taxes consists of the following (in
         thousands):


                                                                                             

                                                                December 28,    December 29,          December 30,
                                                                    2002            2001                  2000
                                                               ---------------- ------------------ ------------------
                Current:
                     Federal                                      $  4,530         $      -           $      -
                     State                                             426                -                  -
                     Foreign                                            40                -                  -
                Deferred:
                     Federal                                         2,187                -                  -
                                                                   -------          -------            -------
                                                                  $  7,183         $      -           $      -
                                                                   =======          =======            =======

                                      F-30

                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         Income tax benefit for the years ended December 28, 2002,  December 29,
         2001,  and  December  30, 2000,  differed  from the amount  computed by
         applying the statutory U.S.  federal income tax rate (35%) to loss from
         continuing  operations before income taxes as a result of the following
         (in thousands):


                                                                                             
                                                            December 28,        December 29,          December 30,
                                                               2002                2001                  2000
                                                        ------------------- ---------------------- ------------------
                Computed "expected" tax expense             $  5,792               $ (4,146)          $ (6,846)
                State income taxes                               426                      -                  -
                Tax benefits related to January 1,             2,247                      -                  -
                     1994 valuation allowance
                Change in valuation allowance                   (948)                 4,289              7,554
                IRS tax settlement                              (490)                     -                  -
                Other, net                                       156                   (143)              (708)
                                                             -------                -------            -------
                                                            $  7,183               $      -           $      -
                                                             =======                =======            =======

         The tax effects of temporary  differences that give rise to significant
         portions of the deferred tax assets and  deferred  tax  liabilities  at
         December  28,  2002 and  December  29,  2001 are  presented  below  (in
         thousands):


                                                                                            
                                                                         December 28,             December 29,
                                                                             2002                     2001
                                                                    ----------------------- -------------------------
                Deferred tax assets:
                    Net operating loss carryforwards                       $  23,498               $  31,305
                    Recapitalization effects of SFAS 15                        4,465                       -
                    Loss contingency reserves                                  2,456                   3,396
                    Other                                                      3,914                   2,485
                                                                            --------                --------
                         Total gross deferred tax assets                      34,333                  37,186
                         Less valuation allowance                            (20,591)                (21,279)
                                                                            --------                --------
                         Net deferred tax assets                              13,742                  15,907
                                                                            --------                --------
                Deferred tax liabilities:
                     Collection routes and contracts                          (3,972)                 (4,985)
                     Property, plant and equipment                            (8,661)                 (9,783)
                     Other                                                    (1,109)                   (926)
                                                                            --------                --------
                Total gross deferred tax liabilities                         (13,742)                (15,694)
                                                                            --------                --------
                                                                           $       -               $     213
                                                                            ========                ========

         The valuation allowance for deferred tax assets as of December 28, 2002
         and December 29, 2001 was  $20,591,000 and  $21,279,000,  respectively.
         The net  changes in the total  valuation  allowance  was a decrease  of
         $688,000  for the year  ended  December  28,  2002 and an  increase  of
         $4,289,000 for the year ended December 29, 2001.

         At December 28, 2002, the Company had net operating loss  carryforwards
         for federal income tax purposes of approximately  $61,836,000  expiring
         through 2020. The availability of the net operating loss  carryforwards
         to reduce future taxable income is subject to various limitations. As a
         result of the change in ownership  which  occurred  pursuant to the May
         2002 recapitalization (see Note 2), the Company believes utilization of
         its net operating  loss  carryforwards  is limited to $687,000 per year
         for the remaining life of the net operating losses.

         The Company  reports tax  benefits  utilized  related to the January 1,
         1994  valuation  allowance as a direct  addition to additional  paid in
         capital.

                                      F-31


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(12)     STOCKHOLDERS' EQUITY

         At December 29, 1993, the Company granted  options to purchase  384,615
         shares  of the  Company's  common  stock to the  former  owners  of the
         Redeemable  Preferred  Stock. The options have a term of ten years from
         the date of grant  and may be  exercised  at a price of $3.45 per share
         (approximated market value at the date of grant).


         The 1993  Flexible  Stock  Option Plan and the 1994  Employee  Flexible
         Stock  Option  Plan  provide for the  granting of stock  options to key
         officers  and salaried  employees of the Company and its  subsidiaries.
         Options to purchase common stock were granted at a price  approximating
         fair market value at the date of grant. Options granted under the plans
         expire  ten  years  from  the date of  grant.  Vesting  occurs  on each
         anniversary  of the  grant  date  as  defined  in the  specific  option
         agreement.  The plans also provide for the  acceleration by one year of
         vesting of all non-vested shares upon the termination of the employee's
         employment  in  certain  circumstances  or upon a change in  management
         control.

         The Non-Employee  Directors Stock Option Plan provides for the granting
         of options to non-employee directors of the Company. As of December 28,
         2002,  options  to  purchase  483,000  shares of common  stock had been
         granted  pursuant  to  this  plan,  of  which  208,000  options  remain
         outstanding.  The  options  have a term of ten  years  from the date of
         grant  and may be  exercised  at a price of $0.56 -  $9.042  per  share
         (market  value at the date of grant).  The options  vest 25% six months
         after the grant date and 25% on each anniversary date thereafter.

         The per share  weighted  average  fair value of stock  options  granted
         during 2002, 2001 and 2000 was $0.63, $0.46 and $1.65, respectively, on
         the date of grant using the Black Scholes option-pricing model with the
         following weighted assumptions:


                                                                                           

                                                              2002                 2001                 2000
                                                      --------------------- -------------------- --------------------
           Expected dividend yield                            0.0%                 0.0%                 0.0%
           Risk-free interest rate, weighted avg.            5.02%                 5.14%                5.28%
           Expected life                                    10 years             10 years             10 years
           Expected annual volatility                    59.95-109.09%         42.31-100.94%        42.31-98.64%




                                      F-32


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         A summary of transactions for all stock options granted follows:


                                                                                      

                                                        Number of          Option exercise     Weighted-avg. exercise
                                                         shares            price per share        price per share
                                                   --------------------- -------------------- -------------------------
Options outstanding at January 1, 2000                 2,236,635            $ 1.75-10.88               $ 5.69
       Granted                                         1,129,050              0.50-1.75                  1.11
       Canceled                                       (1,031,305)            2.63-10.88                  7.74
                                                      ----------
Options outstanding at December 30, 2000               2,334,380              0.50-9.50                  2.43
                                                      ==========
       Granted                                           703,385                0.50                     0.50
       Canceled                                          (11,900)             4.13-9.50                  6.38
                                                      ----------
Options outstanding at December 29, 2001               3,025,865              0.50-9.04                  2.08
                                                      ==========
       Granted                                            28,000              0.56-0.80                  0.68
       Exercised                                          (8,000)             0.56-0.56                  0.56
       Canceled                                         (128,700)             0.50-9.04                  5.11
                                                      ----------
Options outstanding  at December  28, 2002             2,917,165              0.50-9.04                  1.93
                                                      ==========
Options exercisable at December 28, 2002               2,481,994              0.50-9.04                  2.19
                                                      ==========


At  December  28,  2002,  the  range of  exercise  prices  and  weighted-average
remaining contractual life of outstanding options was $0.50-9.042 and 5.5 years,
respectively.

At December 28, 2002 and December  29, 2001,  the number of options  exercisable
was 2,481,994 and 2,407,867,  respectively,  and the  weighted-average  exercise
price of those options was $2.19 and $2.46, respectively.

(13)     EMPLOYEE BENEFIT PLANS

         The Company has retirement and pension plans covering substantially all
         of its employees.  Most retirement benefits are provided by the Company
         under separate final-pay noncontributory pension plans for all salaried
         and hourly employees (excluding those covered by union-sponsored plans)
         who meet service and age  requirements.  Benefits are based principally
         on length of  service  and  earnings  patterns  during  the five  years
         preceding retirement.

         The Company's funding policy for those plans is to contribute  annually
         not less than the  minimum  amount  required  nor more than the maximum
         amount  that  can  be  deducted  for  federal   income  tax   purposes.
         Contributions are intended to provide not only for benefits  attributed
         to  service  to date but also for  those  expected  to be earned in the
         future.  Based upon current actuarial  estimates,  the Company does not
         expect any payments will be necessary in order to meet minimum  funding
         requirements during Fiscal 2003.

                                      F-33


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         The  following  table sets forth the plans'  funded  status and amounts
         recognized in the Company's  consolidated  balance  sheets based on the
         measurement date (October 1, 2002 and 2001) (in thousands):


                                                                                              
                                                                             December 28,           December 29,
                                                                                 2002                   2001
                                                                         ---------------------- ---------------------
         Change in benefit obligation:
              Benefit obligation at beginning of period                          $49,461              $45,404
              Service cost                                                         1,332                1,305
              Interest cost                                                        3,614                3,425
              Amendments                                                               -                  301
              Actuarial (gain)/loss                                                2,155                1,541
              Benefits paid                                                       (2,498)              (2,515)
                                                                                 -------              -------
                  Benefit obligation at end of period                             54,064               49,461
                                                                                 -------              -------
         Change in plan assets:
              Fair value of plan assets at beginning of period                    42,349               48,881
              Actual return on plan assets                                         2,856               (4,727)
              Employer contribution                                                  948                  710





                                                                                                
              Benefits paid                                                       (2,498)              (2,515)
                                                                                 -------              -------
                  Fair value of plan assets at end of period                      43,655               42,349
                                                                                  ------              -------
         Funded status                                                           (10,410)              (7,112)
         Unrecognized actuarial (gain)/loss                                       11,646                8,543
         Unrecognized prior service cost                                             800                  928
                                                                                 -------              -------
              Net amount recognized                                             $  2,036             $  2,359
                                                                                 -------              =======
         Amounts recognized in the consolidated balance sheets consist
              of:
              Prepaid benefit cost                                              $  2,036             $  2,359
              Accrued benefit liability                                           (6,681)                (713)
              Intangible asset                                                       800                  180
              Accumulated other comprehensive income  (a)                          5,881                  533
                                                                                 -------              -------
                  Net amount recognized                                         $  2,036             $  2,359
                                                                                 =======              =======


         (a) Reported as accumulated comprehensive loss, net of tax, at December
         28, 2002, in the amount of $3.9 million.

         The Company has  recorded a minimum  liability of $6.7 million and $0.7
         million at  December  28, 2002 and  December  29,  2001,  respectively,
         related to the excess of the accumulated benefit obligations associated
         with its pension plans over the fair value of the plans' assets.

         During December 2001, the Company's pension plans received common stock
         resulting  from the  demutualization  of an  insurance  company with an
         aggregate  fair value of $4.0 million which has been  considered in the
         determination of the amount of minimum  liability  reported at December
         29, 2001. Since the common stock was received after the October 1, 2001
         measurement  date,  it is not included in the fair value of plan assets
         at end of period for Fiscal 2001 in the table  above.  The common stock
         received  was  considered  an  asset  of  the  plans  for  purposes  of
         determining Fiscal 2002 net pension cost.

                                      F-34



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

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


                                                                                

                                                  December 28,        December 29,       December 30,
                                                      2002                2001               2000
                                               -------------------- ------------------- -----------------
         Service cost                               $ 1,332              $ 1,305             $ 1,478
         Interest cost                                3,614                3,425               3,363
         Expected return on plan assets              (4,187)              (4,424)             (4,217)
         Net amortization and deferral                  511                   98                  98
                                                     ------               ------              ------
         Net pension cost                           $ 1,270              $   404             $   722
                                                     ======               ======              ======



         Assumptions used in accounting for the employee benefit pension plans
were:



                                                                                    
                                                            December 28,     December 29,    December 30,
                                                                2002             2001            2000
                                                          ----------------- --------------- ----------------
           Weighted average discount rate                        7.25%            7.50%           7.75%
           Rate of increase in future compensation               5.16%            5.16%           5.08%
              levels
           Expected long-term rate of return on assets           8.75%            9.25%           9.25%



         The Company participates in several  multi-employer pension plans which
         provide  defined  benefits  to  certain   employees  covered  by  labor
         contracts.  These  plans  are  not  administered  by  the  Company  and
         contributions   are  determined  in  accordance   with   provisions  of
         negotiated labor  contracts.  Information with respect to the Company's
         proportionate share of the excess, if any, of the actuarially  computed
         value of vested  benefits over these  pension  plans' net assets is not
         available.  The cost of such plans amounted to $1,441,000,  $1,491,000,
         and  $1,384,000  for the years ended  December 28,  2002,  December 29,
         2001, and December 30, 2000, respectively.

(14)     CONCENTRATION OF CREDIT RISK

         Concentration   of  credit  risk  is  limited  due  to  the   Company's
         diversified   customer  base  and  the  fact  that  the  Company  sells
         commodities.  No  single  customer  accounted  for more than 10% of the
         Company's net sales in 2002, 2001 and 2000.

                                      F-35


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(15)     DISCONTINUED OPERATIONS

         As disclosed in Note 1(b)(13),  the Company  adopted SFAS 144 in Fiscal
         2002.  SFAS 144 requires  discontinued  operations to be carried at the
         lower  of  cost  or  fair  value  less  costs  to  sell,  broadens  the
         presentation  of  discontinued  operations to include a component of an
         entity  rather  than  a  segment  of  a  business,   and  requires  the
         classification   of  prior  year  operating   results  of  discontinued
         operations to be consistent with the current year presentation.

         In 1998, the Company made a decision to  discontinue  the operations of
         the  Bakery   By-Products   Recycling  business  segment  in  order  to
         concentrate its financial and human resources on its other  businesses.
         The  disposal of this  business  was  accounted  for as a  discontinued
         operation.  Gain on disposal relates to write-off of an indemnification
         liability  in  Fiscal  2000  upon  termination  of the  indemnification
         period.


                                      F-36


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         In accordance  with SFAS No. 144, the prior year  operating  results of
         the  Linkwood,  MD,  facility  have been  reclassified  and reported as
         discontinued operation to facilitate  comparability of reported results
         of operations.  A summary of the  components of loss from  discontinued
         operations net of tax follows (in thousands):


                                                                                    
                                                             2002              2001              2000
                                                      ------------------- ---------------- -----------------
             Linkwood                                    $   (403)         $   (740)         $  (3,699)
             Bakery ByProducts                                  -                 -                371
                                                         --------          --------          ---------
               Total                                     $   (403)         $   (740)         $  (3,328)
                                                         ========          ========          =========


On October 18, 2002, the Company sold the Company's Linkwood, Maryland rendering
plant to a third party purchaser for cash consideration of $4.3 million,  net of
applicable  costs of selling the plant  location.  Results of  operations of the
Linkwood facility were previously included in results of the Company's rendering
segment, and have been reclassified to Loss from Discontinued  Operations in the
accompanying consolidated statements of operations.  Revenues and losses, net of
applicable taxes, of the plant are as follows (in thousands):



                                                                                    
                                                                           Year Ended
                                                        December 28,       December 29,      December 30,
                                                            2002               2001              2000
                                                      ------------------- ---------------- -----------------

         Net sales                                      $    8,371         $  13,645        $  14,479
                                                         ---------          --------         --------

         Cost of sales and operating expenses                7,565            12,394           13,602
         Selling, general and administrative                   282               260              257
         Depreciation and amortization                       1,270             1,736            4,322
                                                         ---------          --------         --------

         Total costs and expenses                            9,117            14,390           18,181

         Operating and pretax loss, now classified            (746)             (745)          (3,702)
           as loss from discontinued operations

         Other income (expense)                                  -                 5                3
                                                         ---------          --------         --------

         Loss before income taxes                             (746)             (740)          (3,619)
                                                         ---------          --------         --------

         Income tax benefit                                    343                 -                -
                                                         ---------          --------         --------

         Loss from discontinued operations, net of      $     (403)        $    (740)       $  (3,699)
         tax                                             =========          ========         ========




                                      F-37


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)


(16)     CONTINGENCIES

         LITIGATION

         Melvindale
         ----------

         A group of residents  living near the  Company's  Melvindale,  Michigan
         plant  has filed  suit,  purportedly  on  behalf of a class of  persons
         similarly  situated  ("Melvindale I"). The class has been certified for
         injunctive  relief only.  The court  declined to certify a damage class
         but has  permitted  approximately  300  people to join the  lawsuit  as
         plaintiffs.  The suit is based on legal theories of trespass,  nuisance
         and negligence  and/or gross  negligence,  and is pending in the United
         States District Court, Eastern District of Michigan.  Plaintiffs allege
         that  emissions  to the air,  particularly  odor,  from the plant  have
         reduced the value and enjoyment of Plaintiffs' property, and Plaintiffs
         seek  unspecified  compensatory  and exemplary  damages in an amount in
         excess of $25,000 per Plaintiff and unspecified  injunctive relief. The
         Company is unable to estimate its  potential  liability,  if any,  from
         this  lawsuit.  In a lawsuit with  similar  factual  allegations,  also
         pending in United States District Court,  Eastern District of Michigan,
         the City of  Melvindale  has filed suit  against the  Company  based on
         legal  theories of  nuisance,  trespass,  negligence  and  violation of
         Melvindale  nuisance  ordinances  seeking  damages and  declaratory and
         injunctive  relief. The court has dismissed the trespass counts in both
         lawsuits, and all of the damage claims in the suit filed by the City of
         Melvindale  have  been  dismissed.  The City of  Melvindale  now  seeks
         unspecified  injunctive  relief.  In April,  2002, a group of residents
         living near the Company's  Melvindale,  Michigan plant,  represented by
         named plaintiffs not listed in the Melvindale I lawsuit but purportedly
         on behalf of a class of persons defined similarly to that in Melvindale
         I, filed a suit ("Melvindale II").  Plaintiffs in Melvindale II rely on
         essentially  the  same  legal  theories  and  factual   allegations  as
         originally  set forth in  Melvindale  I.  However,  the  Melvindale  II
         Plaintiffs  purportedly  seek  only  damages  in an amount of more than
         $25,000 and less than $75,000 per member of the  putative  class and do
         not seek injunctive  relief.  The Company removed  Melvindale II, which
         was originally filed in the Circuit Court of Wayne County,  Michigan to
         the United States  District Court,  Eastern  District of Michigan where
         the  Melvindale I and the City of Melvindale  lawsuits are pending.  On
         October 21,  2002,  the  Melvindale  II lawsuit  was  remanded to Wayne
         County  Circuit  Court.  No action  has been  taken by the  court  with
         respect to class  certification.  The Company is unable to estimate its
         potential  liability,  if any,  from this  lawsuit.  The Company or its
         predecessors have operated a rendering plant at the Melvindale location
         since  1927 in a  heavily  industrialized  area  down  river  south  of
         Detroit.  The Company has taken and is taking all  reasonable  steps to
         minimize odor emissions  from its recycling  processes and is defending
         the lawsuits vigorously.

         Long Island City, NY
         --------------------

         The  Company  is  a  party  to a  lawsuit  that  seeks  to  require  an
         environmental cleanup at a property in Long Island City, New York where
         the Company  formerly  operated a rendering  plant  (referred to as the
         "Site").  DMJ Associates (DMJ), which holds a mortgage on the Site, has
         filed suit against the Company,  as a former owner of the Site, as well
         as others  including the present tenants and operators of the Site, the
         owner of an abandoned  hazardous waste disposal site adjoining the Site
         (the "Disposal Facility"), and companies that disposed of wastes at the
         Disposal Facility (the "Generator Defendants").  DMJ argues that, inter
         alia,  under federal law it is entitled to relief  directed to have the
         defendants  remediate the  contamination.  DMJ seeks both equitable and
         monetary  relief from all defendants for  investigation,  abatement and
         remediation  of  the  Site.  DMJ  has  not  yet  provided   information
         sufficient  for the Company to  ascertain  the  magnitude  or amount of
         DMJ's total claim nor the Company's alleged share thereof. As a result,
         the Company is unable to estimate its potential liability, if any, from
         this lawsuit. The Company does not have information  suggesting that it
         contributed in any material way to any contamination  that may exist at
         the Site. The Company is actively  defending the suit and is awaiting a
         decision on a motion on summary judgment  regarding the standing of the
         plaintiff.

                                      F-38


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         Sauget, Illinois
         ----------------

         The Company is a party to a lawsuit that seeks to recover costs related
         to an  environmental  cleanup in or near Sauget,  Illinois.  The United
         States  had  filed  a  complaint  against  Monsanto  Chemical  Company,
         Solutia,  Inc.,  Anheuser-Busch,  Inc.,  Union  Electric,  and 14 other
         defendants,  seeking to recover  cleanup costs.  Monsanto (which merged
         with  Pharmacia and Upjohn,  Inc. in 2000 and is now known as Pharmacia
         Corporation) and Solutia in turn filed a third party complaint  seeking
         contribution from the United States,  several federal agencies, and six
         more companies,  in addition to the Company. As potentially responsible
         parties  themselves,  Pharmacia  and  Solutia  are  seeking  to recover
         unspecified  proportionate  shares from each of the other  parties,  in
         addition to the Company,  of an as yet undetermined total cleanup cost.
         A subsidiary of the Company had operated an inorganic  fertilizer plant
         in Sauget,  Illinois  for a number of years  prior to closing it in the
         1960's.  The Company has concluded a settlement  agreement with Solutia
         and Pharmacia to satisfy  claims for  remediation  costs in the pending
         lawsuit,  and in return has  received an  indemnity  and hold  harmless
         agreement  from  Solutia and  Pharmacia  for any claims from others for
         costs  related  to the same  remediation  effort.  The  Company  cannot
         predict what, if any, additional remediation efforts might be necessary
         in the Sauget,  Illinois  area,  or whether it might be made a party to
         any litigation related to such additional remediation.

         Other Litigation

         The Company is also a party to several other lawsuits,  claims and loss
         contingencies  incidental  to its  business,  including  assertions  by
         certain regulatory agencies related to air, wastewater, and storm water
         discharges from the Company's processing facilities.

         Self Insured Risks

         The  Company  purchases  its  workers  compensation,  auto and  general
         liability insurance on a retrospective basis. The Company estimates and
         accrues its expected  ultimate costs related to claims occurring during
         each  fiscal  year and  carries  this  accrual as a reserve  until such
         claims are paid by the Company.

         As a result of the matters discussed above, the Company has established
         loss reserves and accruals for insurance,  environmental and litigation
         matters.  At December 28, 2002,  and December 29, 2001, the reserve for
         insurance,  environmental and litigation contingencies reflected on the
         balance sheet in accrued  expenses and other  non-current  liabilities,
         was approximately  $14.0 million and $10.6 million,  respectively.  The
         increase in these reserves is primarily due to letters of credit issued
         in exchange  for  reduction  of cash  deposits  held by the third party
         insurance  administrator.  Management  of the  Company  believes  these
         reserves for  contingencies  are reasonable  and sufficient  based upon
         present governmental regulations and information currently available to
         management; however, there can be no assurance that final costs related
         to these  matters  will  not  exceed  current  estimates.  The  Company
         believes that any  additional  liability  relative to such lawsuits and
         claims  which may not be covered by  insurance  would not likely have a
         material adverse effect on the Company's financial  position,  although
         it  could  potentially  have  a  material  impact  on  the  results  of
         operations in any one year.

                                      F-39


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

(17)     BUSINESS SEGMENTS

         The Company operates on a worldwide basis within two industry segments:
         Rendering and Restaurant Services. The measure of segment profit (loss)
         includes  all   revenues,   operating   expenses   (excluding   certain
         amortization of intangibles),  and selling,  general and administrative
         expenses  incurred at all  operating  locations  and  excludes  general
         corporate expenses.

                  Rendering
                  ---------

                  Rendering  consists of the collection and processing of animal
                  by-products from butcher shops, grocery stores and independent
                  meat and  poultry  processors,  converting  these  wastes into
                  similar products such as useable oils and proteins utilized by
                  the agricultural and oleochemical industries.

                  Restaurant Services
                  -------------------

                  Restaurant Services consists of the collection of used cooking
                  oils from food service  establishments and recycling them into
                  similar  products such as high-energy  animal feed ingredients
                  and industrial oils.  Restaurant Services also provides grease
                  trap servicing.

         Included in corporate activities are general corporate expenses and the
         amortization of intangibles  related to "Fresh Start Reporting." Assets
         of corporate  activities  include cash,  unallocated  prepaid expenses,
         deferred tax assets, prepaid pension, and miscellaneous other assets.


                                      F-40


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

Business Segment Net Revenues (in thousands):
-----------------------------


                                                                                    
                                                        December 28,       December 29,      December 30,
                                                            2002               2001              2000
                                                      ------------------- ---------------- -----------------
                  Rendering:
                    Trade                               $   177,234        $  181,315       $  171,966
                    Intersegment                             33,026            31,023           25,684
                                                       ------------       -----------      -----------
                                                            210,260           212,338          197,650
                                                       ------------       -----------      -----------

                  Restaurant Services:
                    Trade                                    85,002            61,649           57,307
                    Intersegment                              9,309             6,854            7,781
                                                       ------------       -----------      -----------
                                                             94,311            68,503           65,088
                                                       ------------       -----------      -----------

                  Eliminations                              (42,335)          (37,877)         (33,465)
                                                       ------------       -----------      -----------
                  Total                                 $   262,236        $  242,964       $  229,273
                                                       ============       ===========      ===========

Business Segment Profit (Loss)  (in thousands):
-----------------------------

                                                         December 28,       December 29,      December 30,
                                                             2002               2001              2000
                                                      ------------------- ---------------- -----------------

                  Rendering                             $    22,406         $   14,740       $   11,869
                  Restaurant Services                        17,235              7,436            3,487
                  Corporate Activities                      (23,867)           (19,119)         (17,246)
                  Interest expense                           (6,408)           (14,162)         (13,971)
                                                       ------------        -----------      -----------
                  Income (loss) from continuing         $     9,366         $  (11,105)      $  (15,861)
                  operations                           ============        ===========      ===========




         Certain assets are not attributable to a single  operating  segment but
         instead  relate  to  multiple   operating  segments  operating  out  of
         individual  locations.  These assets are utilized by both the Rendering
         and  Restaurant  Services  business  segments and are identified in the
         category   Combined   Rend./Rest.   Svcs.   Depreciation   of  Combined
         Rend./Rest.  Svcs.  assets is  allocated  based upon an estimate of the
         percentage  of  corresponding  activity  attributed  to  each  segment.
         Additionally,  although  intangible  assets are  allocated to operating
         segments,  the  amortization  related to the  adoption of "Fresh  Start
         Reporting" is not considered in the measure of operating segment profit
         (loss) and is included in Corporate Activities.


                                      F-41



                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)



Business Segment Assets (in thousands):
-----------------------
                                                                                     

                                                                           December 28,      December 29,
                                                                               2002              2001
                                                                          ---------------- -----------------

                  Rendering                                               $   55,425       $   56,847
                  Restaurant Services                                         12,104           14,779
                  Combined Rend./Rest. Svcs.                                  62,744           64,155
                  Corporate Activities                                        32,639           23,298
                                                                          ----------       ----------
                  Total                                                   $  162,912       $  159,079
                                                                          ==========       ==========

Business Segment Property, Plant and Equipment (in thousands):
----------------------------------------------

                                                                           December 28,      December 29,
                                                                               2002              2001
                                                                          ---------------- -----------------

                  Depreciation and amortization:
                    Rendering                                             $    8,009       $   16,087
                    Restaurant Services                                        4,321            6,333
                    Corporate Activities                                       4,096            2,478
                                                                          ----------       ----------
                  Continuing Operations                                       16,426           24,898
                  Discontinued Operations                                      1,270            1,736
                                                                          ----------       ----------
                  Total                                                   $   17,696       $   26,634
                                                                          ==========       ==========

                  Additions:
                    Rendering                                             $    1,184       $    3,032
                    Restaurant Services                                          434            1,544
                    Combined Rend./Rest. Svcs.                                10,898            1,292
                    Corporate Activities                                         917            2,979
                                                                          ----------       ----------
                  Continuing Operations                                       13,433            8,847
                  Discontinued Operations                                        654              295
                                                                          ----------       ----------
                  Total                                                   $   14,087       $    9,142
                                                                          ==========       ==========


The  Company has no material  foreign  operations,  but exports a portion of its
products to customers in various foreign countries.

Geographic Area Net Trade Revenues (in thousands):
----------------------------------


                                                                                   

                                                         December 28,     December 29,      December 30,
                                                             2002             2001              2000
                                                      ------------------- ---------------- -----------------
         United States                                    $127,757          $104,839         $100,580
         Korea                                               5,181             3,538            6,041
         Spain                                                   -               388              963
         Mexico                                             19,046            23,390           25,090
         Japan                                               1,831             1,075            1,916
         N. Europe                                               -             1,444              707
         Pacific Rim                                         1,259             9,838              889
         Taiwan                                                472               552            1,775
         Canada                                                144               993              864
         Latin/South America                                 6,267             9,192           13,408
         Other/Brokered                                    100,279            87,715           77,040
                                                           -------           -------          -------
         Total                                            $262,236          $242,964         $229,273
                                                           =======           =======          =======


                                      F-42


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         Other/Brokered  trade revenues represent product for which the ultimate
         destination is not monitored and cannot be determined with certainty.

(18) QUARTERLY FINANCIAL DATA (UNAUDITED AND IN THOUSANDS EXCEPT PER SHARE
AMOUNTS):


                                                                                        

                                                                 Year Ended December 28, 2002
                                          ---------------------------------------------------------------------------
                                          First Quarter      Second Quarter      Third Quarter      Fourth Quarter
                                          -------------      --------------      -------------      --------------

         Net sales                              $58,679         $60,189             $72,969            $70,399
         Operating income                         3,687           3,345               7,082              6,843
         Income from continuing
            operations                              536           1,326               3,809              3,695
         Income (loss) from discontinued
            operations                               47             (77)               (356)               (17)
         Net income                                 583           1,249               3,453              3,678
         Basic earnings per share                  0.04            0.03                0.05               0.05
         Diluted earnings per share                0.04            0.03                0.05               0.05


                                                                 Year Ended December 29, 2001
                                          ---------------------------------------------------------------------------
                                          First Quarter      Second Quarter      Third Quarter      Fourth Quarter
                                          -------------      --------------      -------------      --------------

         Net sales                              $60,178         $55,141             $61,500            $66,145
         Operating income (loss)                  1,816          (1,128)              1,257              2,768
         Loss from continuing operations
                                                   (836)         (5,507)             (3,204)            (1,558)
         Income (loss) from discontinued
            operations                             (313)           (214)               (315)               102
         Net loss                                (1,149)         (5,721)             (3,519)            (1,456)
         Basic loss per share                     (0.07)          (0.37)              (0.23)             (0.09)
         Diluted loss per share                   (0.07)          (0.37)              (0.23)             (0.09)


         As disclosed in Note 1(b)(13) and Note 15, the Company adopted SFAS 144
         in Fiscal  2002.  SFAS 144 requires the  classification  of  previously
         reported operating results of discontinued  operations to be consistent
         with the current year presentation.  Accordingly, Fiscal 2002 first and
         second   quarter  and  prior  years'   financial   statements   reflect
         reclassification   of  the   Linkwood,   MD  results  as   discontinued
         operations.

(19) RECENTLY ISSUED ACCOUNTING STANDARDS

         Recently,  the  Financial  Accounting  Standards  Board  (FASB)  issued
         Statement of Financial  Accounting  Standards No. 143,  Accounting  for
         Asset  Retirement   Obligations  (SFAS  143);  Statement  of  Financial
         Accounting  Standards  No.  145,  Rescission  of  SFAS  4,  44 and  64,
         Amendment of SFAS 13, and Technical  Corrections (SFAS 145);  Statement
         of  Financial  Accounting  Standards  No.  146,  Accounting  for  Costs
         Associated with Exit or Disposal  Activities  (SFAS 146); and Statement
         of Financial  Accounting  Standards No. 148, Accounting for Stock-Based
         Compensation  -  Transition  and  Disclosure - an amendment of SFAS 123
         (SFAS 148).

         In June  2001,  the FASB  issued  SFAS No.  143,  Accounting  for Asset
         Retirement  Obligations.  SFAS 143  requires  the Company to record the
         fair value of an asset  retirement  obligation  as a  liability  in the
         period  in  which  it  incurs a legal  obligation  associated  with the
         retirement  of  tangible   long-lived   assets  that  result  from  the
         acquisition,  construction,  development,  and/or  normal  use  of  the
         assets.  The  Company  also  records  a  corresponding  asset  that  is
         depreciated  over  the life of the  asset.  Subsequent  to the  initial
         measurement of the asset retirement obligation,  the obligation will be
         adjusted  at the end of each  period to reflect the passage of time and
         changes in the estimated  future cash flows  underlying the obligation.

                                      F-43


                   DARLING INTERNATIONAL INC. AND SUBSIDIARIES
             Notes to Consolidated Financial Statements (continued)

         The Company is  required  to adopt SFAS 143 on  December  29, 2002 (the
         first day of Fiscal 2003).  The adoption of SFAS 143 is not expected to
         have a material effect on the Company's financial statements.

         In June  2002,  the FASB  issued  SFAS No.  146,  Accounting  for Costs
         Associated  with  Exit  or  Disposal  Activities.  SFAS  146  addresses
         financial  accounting and reporting for costs  associated  with exit or
         disposal  activities  and nullifies  Emerging  Issues Task Force (EITF)
         Issue 94-3,  Liability  Recognition  for Certain  Employee  Termination
         Benefits and Other Costs to Exit an Activity.  The  provisions  of this
         statement  are  effective  for  exit or  disposal  activities  that are
         initiated after December 31, 2002, with early  application  encouraged.
         The adoption of SFAS 146 is not  expected to have a material  effect on
         the Company's financial statements.

         In November 2002, the FASB issued  Interpretation  No. 45,  Guarantor's
         Accounting  and  Disclosure   Requirements  of  Guarantees,   Including
         Indirect  Guarantees of Indebtedness to Others,  an  interpretation  of
         FASB  Statements  No.  5,  57,  and  107,  and  a  rescission  of  FASB
         Interpretation   No.  34.  This   Interpretation   elaborates   on  the
         disclosures  to be  made  by a  guarantor  in its  interim  and  annual
         financial statements about its obligations under guarantees issued. The
         Interpretation   also   clarifies  that  a  guarantor  is  required  to
         recognize,  at inception of a guarantee, a liability for the fair value
         of the obligation  undertaken.  The initial recognition and measurement
         provisions of the Interpretation are applicable to guarantees issued or
         modified  after  December  31,  2002,  and are not  expected  to have a
         material  effect on the Company's  financial  statements The disclosure
         requirements  are  effective  for  financial  statements  of interim or
         annual periods ending after December 15, 2002.

         In  December  2002,  the FASB  issued  SFAS  No.  148,  Accounting  for
         Stock-Based  Compensation - Transition and Disclosure,  an amendment of
         FASB Statement No. 123. This  Statement  amends FASB Statement No. 123,
         Accounting for Stock-Based Compensation, to provide alternative methods
         of  transition  for a  voluntary  change  to the fair  value  method of
         accounting for stock-based  employee  compensation.  In addition,  this
         Statement  amends the disclosure  requirements  of Statement No. 123 to
         require  prominent  disclosures  in both annual and  interim  financial
         statements.  Certain of the disclosure  modifications  are required for
         fiscal  years  ending  after  December 15, 2002 and are included in the
         notes to the accompanying consolidated financial statements.

         In January 2003, the FASB issued  Interpretation No. 46,  Consolidation
         of Variable  Interest  Entities,  an interpretation of ARB No. 51. This
         Interpretation  addressed the consolidation by business  enterprises of
         variable  interest  entities  as  defined  in the  Interpretation.  The
         Interpretation  applies  immediately to variable  interests in variable
         interest  entities  created  after  January 31,  2003,  and to variable
         interests in variable  interest  entities  obtained  after  January 31,
         2003. The application of this  Interpretation is not expected to have a
         material   effect   on  the   Company's   financial   statements.   The
         Interpretation  requires  certain  disclosures in financial  statements
         issued after January 31, 2003,  if it is  reasonably  possible that the
         Company  will  consolidate  or  disclose   information  about  variable
         interest entities when the Interpretation becomes effective.


                                      F-44







SCHEDULE II

                                           Valuation and Qualifying Accounts
                                                    (In thousands)
                                                                                             
                                                            Additions Charged to:
                                          Balance at    ---------------------------                     Balance at
                                           Beginning      Costs and                                       End of
               Description                 of Period      Expenses        Other       Deductions          Period
---------------------------------------------------------------------------------------------------------------------

Accumulated amortization of collection routes and contracts:

   Year ended December 28, 2002           $  22,139     $     4,280      $       -     $    2,463     $    23,956
                                           ========      ==========       ========      =========      ==========
   Year ended December 29, 2001           $  18,828     $     5,014      $       -     $    1,703     $    22,139
                                           ========      ==========       ========      =========      ==========
   Year ended December 30, 2000           $  15,819     $     5,498      $       -     $    2,489     $    18,828
                                           ========      ==========       ========      =========      ==========

Accumulated amortization of
goodwill:

   Year ended December 28, 2002           $   1,077     $         -      $       -     $        -     $     1,077
                                           ========      ==========       ========      =========      ==========
   Year ended December 29, 2001           $     883     $       242      $       -     $       48     $     1,077
                                           ========      ==========       ========      =========      ==========
   Year ended December 30, 2000           $     741     $       142      $       -     $        -     $       883
                                           ========      ==========       ========      =========      ==========

Note:  Deductions consist of the write-off of fully amortized collection routes and contracts and goodwill.


Reserve for bad debts:

   Year ended December 28, 2002           $     467     $       416      $       -     $      255     $       628
                                           ========      ==========       ========      =========      ==========
   Year ended December 29, 2001           $     680     $       582      $       -     $      795     $       467
                                           ========      ==========       ========      =========      ==========
   Year ended December 30, 2000           $   2,408     $       641      $       -     $    2,369     $       680
                                           ========      ==========       ========      =========      ==========

Deferred tax valuation allowance:

   Year ended December 28, 2002           $  21,279     $       688      $       -     $        -     $    20,591
                                           ========      ==========       ========      =========      ==========
   Year ended December 29, 2001           $  16,990     $     4,289      $       -     $        -     $    21,279
                                           ========      ==========       ========      =========      ==========
   Year ended December 30, 2000           $   9,436     $     7,554      $       -     $        -     $    16,990
                                           ========      ==========       ========      =========      ==========

Note:  Deductions consist of write-offs of uncollectable accounts receivable.




                                      F-45









                           DARLING INTERNATIONAL INC.


                   100,000 shares of Series A Preferred Stock

                               ------------------

                               P R O S P E C T U S
                               ------------------

                               ____________, 2003





                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  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..................      $        4,573
         Accounting Fees and Expenses.........................................              35,000
         Legal Fees and Expenses..............................................              35,000
         Transfer Agent and Registrar Fees and Expenses.......................                   0
         Printing and Engraving Expenses......................................               6,000
         Miscellaneous Fees and Expenses......................................               1,000
                                                                                    --------------
                    Total.....................................................      $       81,573
                                                                                    ==============


------------------------

(1)  All amounts are  estimates  except the SEC filing fee.  Includes  estimated
     expenses incurred in connection with the original filing and each amendment
     to date.

Item 14. 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 15. Recent Sales of Unregistered Securities

         Within the past three years,  Darling has issued and sold  unregistered
securities in the transactions described below:

         As  part  of the  Recapitalization,  on May  13,  2002,  we  issued  an
aggregate of  46,705,086  shares of our common  stock and 100,000  shares of our
Series A Preferred Stock to our lenders in exchange for the lenders canceling an
aggregate of $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 $3,855,000  forbearance fee we owed to
the lenders under a forbearance  agreement then existing.  These securities were
issued in reliance on the exemption from  registration  provided by Section 4(2)
of the Securities Act.

         Of such  46,705,086  shares of common stock,  4,359,141  were issued to
Credit  Lyonnais New York Branch;  10,522,770 were issued to PPM America Special
Investments  Fund,  L.P.;  719,940 were issued to Daple,  S.A.;  6,659,897  were
issued to PPM America Special Investments CBO II, L.P.; 6,434,923 were issued to
Bank One N.A.;  2,075,782  were  issued to Credit  Agricole  Indosuez;  363 were
issued to Wells Fargo Bank (Texas) National  Association;  1,037,891 were issued
to Ark CLO 2000-1,  Limited;  8,355,849 were issued to Cerberus Partners,  L.P.;
and 6,538,530 were issued to Avenue Special Situations Fund II, L.P.

         Of such 100,000 shares of Series A Preferred  Stock,  9,333 were issued
to Credit  Lyonnais New York Branch;  22,531 were issued to PPM America  Special
Investments Fund, L.P.; 1,541 were issued to Daple,  S.A.; 14,259 were issued to
PPM America  Special  Investments  CBO II, L.P.;  13,778 were issued to Bank One
N.A.; 4,444 were issued to Credit Agricole Indosuez; 1 was issued to Wells Fargo
Bank (Texas) National Association; 2,222 were issued to Ark CLO 2000-1, Limited;
17,891 were issued to Cerberus Partners,  L.P.; and 14,000 were issued to Avenue
Special Situations Fund II, L.P.




                                      II-2




Item 16. Exhibits and Financial Statement Schedules

         (a)      Exhibits

    Exhibit No.      Document
    -----------      --------

        3.1          Restated  Certificate of Incorporation  of the Company,  as
                     amended.+

        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.+

        5.1          Opinion  of  Dechert  as to the  legality  of the shares of
                     Series A Preferred Stock being registered.+

       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.+

       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.+

       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.+

       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).

                                      II-3


       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.+

       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.+

       23.1          Consent of Dechert.+

       23.2          Consent of KPMG (filed herewith).

       24.1          Power of Attorney.+



------------------------
+ Previously filed.

         (b)      Financial Statement Schedules


                  Schedule II Valuation and Qualifying Accounts --
                           Three Years Ended December 28, 2002 (Page F-45)


         Schedules  other than those listed  above have been omitted  since they
are not required or are not  applicable or the required  information is shown in
the financial  statements or related notes. Columns omitted from schedules filed
have been omitted since the information is not applicable.


                                      II-4



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-5



                                   SIGNATURES


         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
registrant  certifies  has  duly  caused  this  amendment  to  the  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in Irving, Texas, on the 30th day of May, 2003.

                                             DARLING INTERNATIONAL INC.


                                             By: /s/ John O. Muse
                                                --------------------------------
                                                John O. Muse
                                                Executive Vice President -
                                                Finance and Administration


         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
amendment to the 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                      May  30, 2003
-----------------------------            Chief Executive Officer
Randall C. Stuewe

/s/ James A. Ransweiler                  President and Chief Operating  Officer         May  30, 2003
-----------------------------            (Principal Executive Officer)
James A. Ransweiler

/s/ John O. Muse                         Executive Vice President - Finance and         May  30, 2003
-----------------------------            Administration (Principal Financing and
John O. Muse                             Accounting Officer)

          *                              Director                                       May  30, 2003
-----------------------------
O. Thomas Albrecht

          *                              Director                                       May  30, 2003
-----------------------------
Fredric J. Klink

          *                              Director                                       May  30, 2003
-----------------------------
Charles Macaluso

          *                              Director                                       May  30, 2003
-----------------------------
Richard A. Peterson


*By /s/ John O. Muse
   --------------------------
         John O. Muse
         Attorney-In-Fact





                                      II-6




                                 EXHIBIT INDEX


    Exhibit No.      Document
    ----------       --------

        3.1          Restated  Certificate of Incorporation  of the Company,  as
                     amended.+

        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.+

        5.1          Opinion  of  Dechert  as to the  legality  of the shares of
                     Series A Preferred Stock being registered.+

       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.+

       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.+

       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.+

       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.+

       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.+


       23.1          Consent of Dechert.+

       23.2          Consent of KPMG (filed herewith).

       24.1          Power of Attorney.+



------------------------
+ Previously filed.