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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-76035
PROSPECTUS
DAN RIVER INC.
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9,224,263 Shares Class A Common Stock
(par value $.01 per share)
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This prospectus relates to the offering from time to time of up to
9,224,263 shares of Class A Common Stock of Dan River Inc. by certain of our
shareholders. We will not receive any of the proceeds from the sale of the
shares being offered. We are registering the resale of these shares, but the
registration of such shares does not necessarily mean that any of such shares
will be offered or sold by the selling shareholders.
The selling shareholders from time to time may offer and sell the
shares directly to purchasers or through agents, underwriters or dealers on
terms to be determined at the time of sale. If required, the names of any
agents, underwriters or dealers and any other required information will be set
forth in an accompanying prospectus supplement.
The Class A Common Stock is listed on the New York Stock Exchange under
the symbol "DRF." On April 7, 1999, the last sale price of the Class A Common
Stock as reported on the New York Stock Exchange Composite Tape was $7.625 per
share. Shares of Class A Common Stock offered pursuant to this prospectus are
listed on the New York Stock Exchange.
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INVESTING IN THE CLASS A COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF THESE RISKS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is April 26, 1999
TABLE OF CONTENTS
<TABLE>
<S> <C>
About this Prospectus.......................................................................... 1
Where You Can Find More Information............................................................ 1
The Company.................................................................................... 2
Risk Factors................................................................................... 3
Use of Proceeds................................................................................ 7
Selling Shareholders........................................................................... 7
Plan of Distribution........................................................................... 9
Validity of Class A Common Stock............................................................... 9
Experts........................................................................................ 10
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission using a "shelf" registration process.
Under this shelf process, certain of our shareholders (the "selling
shareholders") may sell up to an aggregate of 9,224,263 shares of Class A Common
Stock in one or more offerings. This prospectus provides you with a general
description of the Class A Common Stock. You should read this prospectus and any
applicable prospectus supplement provided to you together with the additional
information described under the heading "Where You Can Find More
Information."...............................................................
The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. That registration
statement can be read at the SEC web site or at the SEC offices mentioned under
the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. The Company's SEC filings are available to the
public over the Internet at the SEC's web site at http://www.sec.gov. You may
also read and copy any document we file with the SEC at its public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20549. You can also
obtain copies of the documents at prescribed rates by writing to the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference facilities. Our SEC filings are also available at the
office of the New York Stock Exchange, 20 Broad Street, New York, New York
10005. For
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further information on obtaining copies of the Company's filings at the New York
Stock Exchange, you should call (212-656-5282).
The SEC allows us to "incorporate by reference" into this prospectus
the information that we file with the SEC, which means that we disclose
important information to you by referring to such documents. The information
incorporated by reference is an important part of this prospectus and the
accompanying prospectus supplement. In addition, any information that we file
with the SEC subsequent to the date of this prospectus will automatically update
this prospectus. We incorporate by reference the documents listed below and any
filings that we make with the SEC under sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the initial filing of the registration
statement that contains this prospectus and prior to the time that the selling
shareholders sell all of the Class A Common Stock offered by this prospectus:
- Annual Report on Form 10-K for fiscal year ended January 2, 1999.
- Current Reports on Form 8-K filed on October 27, 1998 and April 9,
1999.
- Current Report on Form 8-K/A Amendment No. 1 (to Form 8-K filed on
October 27, 1998) filed on April 9, 1999.
- The description of the Class A Common Stock included in our
Registration Statement on Form 8-A dated September 26, 1997.
You may request a copy of these filings (other than an exhibit to a
filing unless that exhibit is specifically incorporated by reference into that
filing) at no cost, by writing to or telephoning us at the following address:
General Counsel
Dan River Inc.
2291 Memorial Drive
Danville, Virginia 24541
(804) 799-7122
You should only rely on the information incorporated by reference or
set forth in this prospectus or any applicable prospectus supplement. We have
not authorized anyone else to provide you with different information. We are
only offering these securities in states where the offer is permitted. You
should not assume that the information in this prospectus or the applicable
prospectus supplement is accurate as of any date other than the dates on the
front of such documents.
THE COMPANY
Founded in 1882, we are a leading manufacturer and marketer of textile
products for the home fashions and apparel fabrics markets. We design,
manufacture and market a coordinated line of
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value-added home fashions products consisting of bedroom furnishings such as
comforters, sheets, pillowcases, shams, bed skirts, decorative pillows and
draperies. We also manufacture and market a broad range of high quality woven
cotton and cotton-blend apparel fabrics and believe that we are the leading
supplier of men's dress shirting fabrics in the Western Hemisphere (based on net
sales). As a result of the acquisition of The Bibb Company in October 1998, we
now manufacture and sell specialty engineered textile products for use in making
high-pressure hoses and other industrial products.
The Company is incorporated under the laws of the State of Georgia. Our
principal executive offices are located at 2291 Memorial Drive, Danville,
Virginia 24541, and our telephone number is (804) 799-7000. Unless the context
otherwise requires, all references to the Company include its consolidated
subsidiaries.
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RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in shares of Class A
Common Stock.
CYCLICAL NATURE OF TEXTILE INDUSTRY
Domestic demand for textile products tends to vary with the business
cycle of the U.S. economy. In addition, the popularity, supply and demand for
particular textile products may change significantly from year to year based
upon prevailing fashion trends and other factors. These factors historically
have contributed to fluctuations in the sales and profitability of certain
textile products and in our results of operations. A decline in the demand for
textile products or an increase in the supply of textile products due to
expansion of capacity within the textile industry could have a material adverse
effect on our results of operations and financial condition. Changes in fashion
trends or deteriorating economic conditions also could have such a material
adverse effect.
The demand for our products and the level of our sales fluctuate
moderately during the year, based upon historical buying trends. Generally, we
experience increased retail demand for home fashions products during the fall
and Christmas holiday seasons and for apparel fabrics during the same seasons as
well as for Father's Day. As a result, we generally sell more home fashions
during our third and fourth fiscal quarters when demand for home fashions is
generally higher and more apparel fabrics during the first and second quarters
when demand for apparel fabrics is greatest.
INTENSE COMPETITION
We compete in the textile industry, which is highly competitive. We
sell our products primarily to domestic customers. Our competitors include
large, vertically integrated textile manufacturers as well as numerous smaller
companies specializing in limited segments of the market. These competitors are
both domestic and foreign, and include a number of companies that are larger
than we are and have greater financial resources. Increases in domestic capacity
and imports of foreign-made textile and apparel products are a significant
source of competition for us and for many domestic textile manufacturers.
Competition in the form of imported textile and apparel products, pricing
strategies of domestic competitors and the proliferation of newly styled fabrics
competing for fashion acceptance have affected our business environment. The
primary competitive factors in our industry are price, product styling and
differentiation, quality, manufacturing flexibility, delivery time and customer
service. The importance of each of these factors is determined by particular
customers and the characteristics of particular products. If one or more of our
competitors gains an advantage with respect to any key competitive factor, our
business could be materially adversely affected.
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POSSIBLE ADVERSE EFFECT OF FLUCTUATIONS IN PRICE AND AVAILABILITY OF COTTON
Our primary raw material is cotton. By law, U.S. textile companies are
generally prohibited from importing cotton, subject to certain exceptions which
take effect primarily when U.S. cotton prices exceed world cotton prices for a
period of time. Any disparity between U.S. and world cotton prices could create
a competitive disadvantage for us and other domestic textile manufacturers. The
U.S. government has from time to time taken action to improve price imbalances,
but there can be no assurance that this will be the case in the future. Cotton
prices may increase or decrease depending on general economic conditions, supply
and demand and other market variables at the time. Further, since cotton is an
agricultural product, its supply and quality are subject to forces of nature. To
the extent cotton prices increase for any reason, the increase could have a
material adverse effect on our results of operations and financial condition.
We purchase cotton primarily in the domestic market directly from
merchants or through brokers. Generally, we seek to purchase sufficient amounts
of cotton to cover existing order commitments; however, we may purchase cotton
in advance of orders on terms that we deem advantageous, and while we do not
speculate on the price of cotton, we may hedge prices from time to time through
forward contracts and in the futures and options markets. These transactions
could result in higher costs to us and are not guaranteed to protect us from
fluctuations in cotton prices.
SUBSTANTIAL CAPITAL REQUIREMENTS
The textile manufacturing industry is capital intensive. In order to
maintain our competitive position, we must continually modernize our
manufacturing processes, plants and equipment. This modernization process can
involve substantial capital investments. Over the last five fiscal years, we
have invested approximately $140 million in capital improvements. These capital
improvements are designed to reduce manufacturing costs, enhance manufacturing
flexibility and improve product quality and responsiveness to customers. We
generally finance our capital improvements with cash from operations, vendor
financing and borrowings under our credit facilities. If we cannot obtain
sufficient funds from these sources, we may be required to seek alternative
sources of financing or curtail or delay our capital spending plans. We cannot
be certain that such financing will be available when needed or, if available,
that it will be on terms acceptable to us. If we are unable to make capital
improvements necessary to continue modernizing our manufacturing operations and
reduce our costs, our competitive position could be adversely effected. This may
have a material adverse effect on our results of operations and financial
condition.
POSSIBLE ADVERSE EFFECT OF GOVERNMENT POLICY AND IMPORT REGULATIONS
The domestic textile market is subject to various U.S. governmental
policies affecting product supply. The extent of import protection afforded by
the U.S. government to domestic textile producers is subject to considerable
domestic political deliberation. Foreign producers of textile products that
compete with some of our products have labor cost advantages. Given the number
of these foreign producers, if import protections that protect us and other
domestic textile
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manufacturers are substantially eliminated, our business could be materially,
adversely affected. In January 1995, a multilateral trade organization, the
World Trade Organization ("WTO"), was established to replace the General
Agreement on Tariffs and Trade ("GATT"). This new body has set forth the
mechanisms to phase out over time quotas and duties on textile and clothing
trade. The implementation began in January 1995 with the phasing-out of quotas
and the reduction of duties to take place over a 10-year period. The selection
of products at each phase is made by each importing country and must be drawn
from each of the four main textile groups: tops and yarns, fabrics, made-up
textile products and apparel. The elimination of quotas and the reduction of
tariffs under the WTO may result in increased imports of certain textile
products and apparel into North America. These factors could make our products
less competitive against low cost imports from developing countries.
NAFTA, which was entered into by Canada, Mexico and the United States
and became effective on January 1, 1994, has created the world's largest
free-trade zone. The agreement contains safeguards that were sought by the U.S.
textile industry, including a rule of origin requirement that products be
processed in one of the three countries in order to benefit from NAFTA. NAFTA
will phase out all trade restrictions and tariffs on textiles and apparel among
the three countries. In addition, NAFTA requires merchandise to be made from
yarns and fabrics originating in North America in order to avoid trade
restrictions. Thus, not only must apparel be made from North American fabric but
the fabric must be woven from North American spun yarn. There can be no
assurance that the removal of these barriers to trade will not have a material
adverse effect on our results of operations and financial condition.
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
We have substantial indebtedness and significant debt service
requirements. As of February 6, 1999, our aggregate outstanding indebtedness was
$347 million, which was 57% of our total capitalization as of such date. Our
high degree of leverage could have important consequences to our shareholders,
including the following:
- It may be difficult for us to obtain additional financing, whether for
working capital, capital expenditures, acquisitions or other purposes;
- We must use a substantial portion of our cash from operations to pay
principal and interest on our indebtedness, which reduces funds
available for other purposes;
- We may be less flexible in planning for or reacting to changes in
market conditions; and
- We may be more vulnerable in the event of a downturn in our business.
If we are unable to finance our business and expansion plans due to our
leverage, or if we default under our indebtedness, our business would be
materially, adversely affected.
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IMPACT OF RESTRICTIVE COVENANTS ON ABILITY TO OBTAIN ADDITIONAL FINANCING
Our credit agreement and indenture governing our senior subordinated
notes restrict our ability to, among other things (i) incur additional
indebtedness, (ii) place liens on assets, (iii) sell assets, (iv) engage in
mergers or consolidations, (v) pay dividends, (vi) engage in certain
transactions with affiliates and (vii) enter into sale and leaseback
transactions. Under our credit agreement, we are also required to comply with
certain financial ratios. These limitations and requirements may restrict our
ability to obtain additional financing for working capital, capital
improvements, acquisitions or general corporate purposes.
ACQUISITION RISKS
We completed the acquisition of the New Cherokee Corporation in
February 1997 and the acquisition of The Bibb Company in October 1998. In the
future, we may seek additional acquisition opportunities that enhance our
business. We cannot ensure that we will be successful in identifying suitable
acquisition candidates, completing acquisitions, integrating acquired operations
into our existing operations or expanding into new markets. We also cannot
ensure that future acquisitions will not have an adverse effect upon our
operating results, particularly in the fiscal quarters immediately following the
completion of such acquisitions while we are integrating the acquired business
into our operations. Once integrated, acquired operations may not achieve levels
of revenues, profitability or productivity comparable with those achieved by our
existing operations, or otherwise perform as expected. In addition, we compete
for acquisition and expansion opportunities with companies that have
substantially greater resources.
POTENTIAL UNFORESEEN ENVIRONMENTAL LIABILITIES OR COSTS
We are subject to various federal, state and local environmental laws
and regulations. These laws and regulations limit the discharge of pollutants
and the storage, handling and disposal of a variety of substances, including
some substances that contain constituents considered hazardous under
environmental laws. Our dyeing and finishing operations result in the discharge
of substantial quantities of wastewater and emissions to the atmosphere. Our
operations also are governed by laws and regulations relating to workplace
safety and worker health. Among other things, these laws and regulations
establish cotton dust, formaldehyde, asbestos and noise standards, and regulate
the use of hazardous chemicals in the workplace. Treatment costs of air
emissions and wastewater discharges, as well as other costs of environmental
compliance, have increased moderately over the past several years. We do not
know whether compliance with environmental or health and safety laws and
regulations will materially adversely affect our operations in the future. In
addition, we cannot predict what environmental or health and safety legislation
or regulations will be enacted in the future or how existing or future laws or
regulations will be enforced, administered or interpreted. We also are unable to
predict the amount of future expenditures which may be required in order to
comply with any such environmental or health and safety laws or regulations.
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CUSTOMER CONCENTRATION
We market home fashions products, apparel fabrics and engineered
products to over 3,000 customers. During fiscal 1998, our top five home fashions
products customers and apparel fabrics customers accounted for 46% and 31%,
respectively, of our net sales attributable to home fashions products and
apparel fabrics. Our largest home fashions products customer and apparel fabrics
customer accounted for 13% and 4%, respectively, of our net sales in fiscal
1998. The loss of any of our top five home fashions products customers or
apparel fabrics customers could have a material adverse effect on our net sales
attributable to such product lines.
RELIANCE ON KEY MANAGEMENT
Our success depends upon the talents and efforts of a small number of
key management personnel, including Joseph L. Lanier, Jr., our Chairman and
Chief Executive Officer, Richard L. Williams, our President and Chief Operating
Officer, and Barry F. Shea, our Executive Vice President--Chief Financial
Officer. The loss of such management personnel could have an adverse effect on
our business.
SUBSTANTIAL INFLUENCE OF PRINCIPAL SHAREHOLDERS
As of March 31, 1999, certain of our senior executive officers and
their families controlled approximately 31% of the combined outstanding voting
power of all classes of our common stock. As a result, with limited exception,
such persons exert substantial influence with respect to all matters submitted
to a vote of holders of common stock, including election of our directors.
Moreover, pursuant to a voting agreement, Mr. Lanier votes all shares of our
supervoting common stock, the Class B Common Stock, which comprises
approximately 30% of the combined outstanding voting power of all classes of our
common stock.
USE OF PROCEEDS
Dan River Inc. (the "Company") will not receive any of the proceeds
from the sale of the shares of Class A Common Stock offered by the selling
shareholders under this prospectus but has agreed to bear certain expenses
associated with registering such shares under Federal and state securities laws.
The Company is registering the shares for sale to provide the holders thereof
with freely tradeable securities, but the registration of such shares does not
necessarily mean that any of such shares will be offered or sold by the holders
thereof.
SELLING SHAREHOLDERS
The following table sets forth, as of March 31, 1999, (i) the names of
the selling shareholders, (ii) the number of shares of Class A Common Stock
owned by each selling shareholder prior to this offering and (iii) the maximum
number of shares of Class A Common Stock offered by each selling shareholder
under this prospectus. Because the selling shareholders may sell all, some or
none of
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the Class A Common Stock offered under this prospectus, no estimate can be given
as to the amount of Class A Common Stock that will be held by the selling
shareholders upon termination of the offering. See "Plan of Distribution." None
of the selling shareholders has, or within the past three years has had, any
position, office or other material relationship with the Company or any of its
predecessors or affiliates.
Of the 9,224,263 shares of Class A Common Stock covered by this
prospectus, (i) 2,515,540 shares were acquired by certain selling shareholders
pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated
June 28, 1998, as amended, providing for the merger of DR Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of the Company, with and into
The Bibb Company, a Delaware corporation ("Bibb") and (ii) 6,708,723 shares are
held by an existing shareholder of the Company. Pursuant to the Merger
Agreement, the Company agreed to file a shelf registration statement promptly
after the merger covering the Class A Common Stock received by certain of the
selling shareholders in the merger.
<TABLE>
<CAPTION>
Number of Shares Maximum Number
Beneficially Owned of Shares Being
Name of Selling Shareholder Prior to the Offering Offered
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<S> <C> <C>
Mezzanine Investment Limited
Partnership BDR (1)................................ 6,708,723 6,708,723
Franklin Custodian Funds, Inc.,
Income Series (2).................................. 866,285 866,285
Franklin Valuemark Funds,
Income Securities Fund (2)......................... 173,256 173,256
Merrill Lynch, Pierce, Fenner
& Smith Incorporated (2)............................ 856,642 856,642
Penn Capital Management
Company, Inc. (2) (3).............................. 619,357 619,357
Total....................................... 9,224,263 9,224,263
</TABLE>
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(1) Reflects shares of stock beneficially owned by Mezzanine Investment
Limited Partnership-BDR ("MILP") whose address is One Madison Avenue,
New York, New York 10010. The general partner of MILP is 23rd Street
Investments, Inc. ("23rd Street Investments"), a wholly-owned
subsidiary of Metropolitan Life Insurance Company. 23rd Street
Investments has sole voting and investment power with respect to the
Class A Common Stock beneficially owned by MILP. As a result, 23rd
Street Investments is deemed to beneficially own the shares of Class A
Common Stock beneficially owned by MILP.
(2) Represents shares acquired pursuant to the Merger Agreement.
(3) Reflects shares of stock beneficially owned by Penn Capital Management
Company, Inc. ("Penn Capital"). Richard and Marcia Hocker are directors
and majority shareholders of Penn Capital and exercise voting and
investment power with respect to the shares of Class A Common Stock
owned by Penn Capital. As a result, Richard and Marcia Hocker are
deemed to beneficially own all of the shares of Class A Common Stock
beneficially owned by Penn Capital. Mr. and Mrs. Hocker disclaim
beneficial ownership of all of the shares of Class A Common Stock owned
by Penn Capital other than 64,259 shares of Class A Common Stock.
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PLAN OF DISTRIBUTION
The sale of Class A Common Stock by selling shareholders pursuant to
this prospectus may be effected from time to time in one or more transactions at
a fixed price or prices, which may be changed, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices.
The selling shareholders may from time to time offer and sell the
shares directly to purchasers or through agents, underwriters or dealers. Such
sales may be in the form of secondary distributions, exchange distributions,
block trades, ordinary brokerage transactions or a combination of such methods
of sale. Agents or underwriters acting on behalf of any selling shareholder may
receive compensation from the selling shareholder or from purchasers of the
Class A Common Stock for whom they act as agent in the form of discounts,
concessions or commissions. Underwriters may sell the Class A Common Stock to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents. Agents, underwriters and
dealers that participate in the distribution of Class A Common Stock may be
deemed to be underwriters for purposes of the Securities Act of 1933, as amended
(the "Act"), and any discounts, concessions or commissions received by them from
any selling shareholder and any profit on the resale of Class A Common Stock by
them may be deemed to be underwriting discounts and commissions under the Act.
At a time a particular offer of shares is made, a prospectus
supplement, if required, will be distributed that will set forth the names of
any agents, underwriters or dealers and any compensation from the selling
shareholders and any other required information.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is complied
with.
We estimate that we will spend approximately $90,000 for expenses in
connection with the offering of shares by the selling shareholders.
Agents, underwriters or dealers may engage in transactions with or
perform services for us in the ordinary course of business.
VALIDITY OF CLASS A COMMON STOCK
The validity of the Class A Common Stock offered hereby will be passed
upon for the Company by King & Spalding, New York, New York.
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EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended January 2, 1999 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The financial statements of The Bibb Company at January 3, 1998 and
December 28, 1996 and for the year ended January 3, 1998, the three months ended
December 28, 1996, the nine months ended September 28, 1996 and the year ended
December 30, 1995, incorporated herein by reference to the Company's Current
Report on Form 8-K filed on October 27, 1998, as amended by the Company's
Current Report on Form 8-K/A Amendment No. 1, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in giving said report.
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================================================================================
9,224,263 Shares
DAN RIVER INC.
Common Stock
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PROSPECTUS
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April 26, 1999
================================================================================
