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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________
Commission File Number 0-25294
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RIVIANA FOODS INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0177572
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or ogranization)
2777 ALLEN PARKWAY
HOUSTON, TX 77019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 529-3251
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock of the Registrant, par value $1.00 per
share, outstanding at October 30, 1996 was 15,817,690.
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<PAGE>
RIVIANA FOODS INC.
FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 29, 1996
INDEX
Page
----
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at September 29, 1996
and June 30, 1996 ......................................... 1
Consolidated Statements of Income for the Three Months
Ended September 29, 1996 and October 1, 1995 .............. 2
Consolidated Statements of Cash Flows for
the Three Months Ended September 29, 1996
and October 1, 1995 ....................................... 3
Notes to Consolidated Financial Statements.................... 4
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 5
Part II -- Other Information
Item 6 -- Exhibits and Reports on Form 8-K ............................. 7
Signature ................................................................... 8
Exhibit Index ............................................................... 9
<PAGE>
Part I -- Financial Information
Item 1 -- Financial Statements
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars, Except Per Share Amounts)
September 29, June 30,
1996 1996
--------- ---------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash ............................................. $ 1,536 $ 7,086
Cash equivalents ................................. 1,260 304
Marketable securities ............................ 8,152 8,244
Accounts receivable, less allowance for
doubtful accounts of $459 and $419 ............. 40,338 42,109
Inventories ...................................... 56,256 52,884
Prepaid expenses ................................. 2,946 1,987
--------- ---------
Total current assets ..................... 110,488 112,614
PROPERTY, PLANT AND EQUIPMENT:
Land ............................................. 3,549 3,466
Buildings ........................................ 20,240 20,334
Machinery and equipment .......................... 66,197 62,468
--------- ---------
Property, plant and equipment - gross ........ 89,986 86,268
Less - Accumulated depreciation .................. (35,018) (33,921)
--------- ---------
Property, plant and equipment - net .......... 54,968 52,347
DUE FROM AFFILIATES ................................ 569 55
INVESTMENTS IN UNCONSOLIDATED AFFILIATES ........... 12,344 12,176
OTHER ASSETS ....................................... 4,831 5,312
--------- ---------
Total assets ......................... $ 183,200 $ 182,504
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt .................................. $ 4,061 $ 10,770
Current maturities of long-term debt ............. 1,776 2,261
Accounts payable ................................. 29,512 22,204
Accrued liabilities .............................. 11,072 12,418
Income taxes payable ............................. 4,770 3,968
--------- ---------
Total current liabilities .................... 51,191 51,621
LONG-TERM DEBT, net of current maturities .......... 3,374 3,644
DEFERRED INCOME TAXES .............................. 6,308 6,348
OTHER NONCURRENT LIABILITIES ....................... 2,938 2,970
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS ................................. 1,823 1,415
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par, 5,000 shares
authorized, none issued
Common stock, $1 par, 24,000 shares authorized,
15,883 issued .................................. 15,883 15,883
Paid-in capital .................................. 6,067 6,067
Retained earnings ................................ 97,849 96,036
Unrealized gains on marketable securities,
net of taxes ................................... 2,287 2,364
Cumulative foreign currency
tanslation adjustment .......................... (3,763) (3,636)
Treasury stock, at cost, 50
and 16 shares .................................. (757) (208)
--------- ---------
Total stockholders' equity ............... 117,566 116,506
--------- ---------
Total liabilities and stockholders' equity $ 183,200 $ 182,504
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars, Except Per Share Amounts)
(Unaudited)
Three Months Ended
--------------------------
September 29, October 1,
1996 1995
--------- ---------
NET SALES ...................................... $ 105,005 $ 101,856
COST OF SALES .................................. 78,441 73,860
--------- ---------
Gross profit ............................... 26,564 27,996
--------- ---------
COSTS AND EXPENSES:
Advertising, selling and warehousing ......... 16,651 19,027
Administrative and general ................... 4,782 4,700
--------- ---------
Total costs and expenses ................... 21,433 23,727
--------- ---------
Income from operations ..................... 5,131 4,269
OTHER INCOME (EXPENSE):
Gain on sale of marketable securities ........ 359 438
Interest income .............................. 97 128
Interest expense ............................. (560) (624)
Equity in earnings of unconsolidated
affiliates ................................. 230 195
Other income (expense) ....................... (261) 233
--------- ---------
Total other income (expense) ............... (135) 370
--------- ---------
Income before income taxes and
minority interest ....................... 4,996 4,639
INCOME TAX EXPENSE ............................. 1,686 1,574
MINORITY INTEREST IN EARNINGS OF
CONSOLIDATED SUBSIDIARY .................... 70 50
--------- ---------
Net income ................................. $ 3,240 $ 3,015
========= =========
Earnings per share ......................... $ 0.20 $ 0.19
========= =========
Weighted average common shares
outstanding ............................. 15,856 15,883
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended
-----------------------
September 29, October 1,
1996 1995
------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................... $ 3,240 $ 3,015
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization .................. 1,298 1,512
Deferred income taxes .......................... 0 565
Gain on disposition of assets .................. (270) (444)
Equity in earnings of unconsolidated
affiliates ................................... (230) (195)
Change in assets and liabilities:
Accounts receivable, net ................... 1,797 (1,320)
Inventories ................................ (3,252) (6,647)
Prepaid expenses ........................... (957) (936)
Other assets ............................... 295 238
Accounts payable and accrued liabilities ... 5,900 1,316
Income taxes payable ....................... 807 521
Other noncurrent liabilities ............... (41) (70)
Minority interest .......................... 427 50
------- -------
Net cash provided by (used in)
operating activities ................... 9,014 (2,395)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment .......... (3,945) (1,912)
Proceeds from disposals of property,
plant and equipment ............................... 15 38
Proceeds from sale of marketable securities ......... 390 670
Collection of notes receivable ...................... 13 0
Due from (to) affiliates ............................ (527) 754
Increase in marketable securities ................... (25) (34)
------- -------
Net cash used in investing
activities ............................. (4,079) (484)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term debt ......................... (6,757) (35)
Additions to long-term debt ......................... 157 1,955
Repayments of long-term debt ........................ (945) (710)
Dividends paid ...................................... (1,428) (1,323)
Repurchases of common stock ......................... (570) 0
Exercises of common stock options ................... 19 0
------- -------
Net cash used in financing
activities ............................. (9,524) (113)
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS ................................. (5) (80)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS .................. (4,594) (3,072)
CASH AND CASH EQUIVALENTS, beginning
of period ............................................ 7,390 5,142
======= =======
CASH AND CASH EQUIVALENTS, end of period ............... $ 2,796 $ 2,070
======= =======
CASH PAID DURING THE PERIOD FOR:
Interest ............................................ $ 577 $ 684
Income taxes ........................................ 455 555
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Amounts in thousands, except per share amounts)
(Unaudited)
1. Basis for Preparation of the Consolidated Financial Statements
The consolidated financial statements have been prepared by Riviana
Foods Inc. and subsidiaries ("the Company"), without audit, with the exception
of the June 30, 1996, consolidated balance sheet. The financial statements
include consolidated balance sheets, consolidated statements of income and
consolidated statements of cash flows. Certain amounts in the prior year have
been reclassified to conform to the current year presentation. In the opinion of
management, all adjustments, which consist of normal recurring adjustments,
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made.
The financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended June 30, 1996.
2. Earnings per Share
Earnings per share is computed by dividing net income by the
weighted average number of common equivalent shares outstanding. There is no
significant difference between earnings per share on a primary and a fully
diluted basis.
3. Inventories
Inventories were composed of the following:
SEPTEMBER 29, 1996 JUNE 30, 1996
------------------ -------------
Raw materials ........................... $17,602 $10,697
Work in process ......................... 43 34
Finished goods .......................... 31,507 34,959
Packaging supplies ...................... 7,104 7,194
------- -------
Total ....................... $56,256 $52,884
======= =======
4
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
THREE MONTHS ENDED SEPTEMBER 29, 1996 AND OCTOBER 1, 1995
RESULTS OF OPERATIONS
For the three months ended September 29, 1996, sales increased $3.1
million or 3.1% to $105.0 million from $101.9 million recorded for the same
period last year. Volume gains accounted for $1.3 million of the consolidated
increase in sales. A combination of price and product mix increased sales a
further $3.7 million while unfavorable foreign currency translation reduced
sales by $1.9 million. Domestic sales of $59.2 million increased $4.9 million or
9.2% from the prior year sales of $54.3 million. Within the domestic segment,
the retail sector recorded a $4.7 million or 11.8% increase in sales, with all
categories contributing positive dollar volume growth. The largest increase came
from the value-added category where unit volumes and dollar sales increased
12.4% and 15.0%, respectively. In the non-retail sector, sales increased by $0.2
million or 1.6%. Higher sales were recorded in the foodservice ($0.2 million)
and the export/commodity ($0.6 million) categories. Competitive market
conditions in the industrial category restrained growth and sales within this
category declined by $0.6 million or 22.1%. Sales in Central America declined
$1.1 million or 6.1% to $17.1 million compared to $18.2 million in the prior
year. Lower volumes were recorded in fruit and nectar juice product sales and
more than offset higher volumes in the cookie and cracker product lines. In
total, lower volumes reduced sales by $0.8 million. Higher prices, particularly
in the cookie and cracker product lines,increased sales by $1.1 million and
unfavorable currency translation reduced sales by $1.4 million. In Europe, sales
declined by $0.7 million or 2.5% to $28.7 million from $29.4 million last year.
Unit volumes were about even with last year, but continued pressure from the
retail trade restrained prices and lower prices reduced sales by $0.4 million
and unfavorable currency translation reduced sales a further $0.3 million.
Gross profit decreased $1.4 million or 5.1% to $26.6 million from $28.0
million a year ago. Gross profit as a percentage of sales decreased to 25.3%
from 27.5%. The major factor impacting the decrease in the gross profit
percentage was a decline in the gross profit in the domestic rice business where
the margin percentage declined to 33.4% from 38.1% last year. Margins declined
as a result of increased raw material costs. Margins declined slightly in
Central America and Europe as a result of higher costs.
Operating income increased $0.8 million or 20.2% to $5.1 million from
$4.3 million for the same period last year. As a percentage of sales, operating
income increased to 4.9% from 4.2% in the prior year. In the domestic segment,
operating income increased by $0.9 million or 45.8% to $2.8 million from $1.9
million last year. The increase in operating income was a result of lower
promotional spending which more than compensated for the reduced gross profit
that resulted from higher raw material costs. With raw material costs
increasing, lower promotional spending was required to meet competitive
pressures. In Central America, operating income was about even with the prior
year and, in Europe, operating income was down slightly as a result of the
decline in gross profit.
5
<PAGE>
Interest expense declined slightly from the prior year as a result of
lower borrowings from both the domestic and international segments. Borrowings
were reduced due to lower working capital requirements.
Other expenses increased from the prior year by $0.5 million as the
result of lower investment income ($0.1 million) due to previous sales of
marketable securities. Additionally, the Company recorded a loss on the sale of
excess equipment ($0.1 million), lower domestic commercial rice drying income
($0.1 million), reduced rent and royalty income ($0.1 million) and lower foreign
exchange gains ($0.1 million).
Net income for the current quarter increased $0.2 million or 7.5% to
$3.2 million from $3.0 million in the same period last year. Earnings per share
were $0.20 compared to $0.19.
LIQUIDITY AND FINANCIAL POSITION
Cash provided by operating activities totaled $9.0 million for the
quarter ended September 29, 1996 compared to cash used by operating activities
of $2.4 million in the same period last year. The increase in cash provided by
operations was primarily related to a reduction in the level of working capital
employed in the business in the current year.
Cash used for investing activities increased by $3.6 million to $4.1
million as compared to cash used for investing activities in the prior year of
$0.5 million. Additions to property, plant and equipment in the current quarter
totaled $3.9 million which was an increase of $2.0 million from the comparable
period last year. The main increase in spending for new property, plant and
equipment was for increased capacity in the domestic rice segment. There was
also an increase in amounts due from affiliates of $1.3 million. This increase
resulted from increased rice shipments to affiliated units. Proceeds from the
sale of marketable securities were $0.3 million less than in the same quarter
last year.
Cash used for financing activities increased by $9.4 million in the
quarter ended September 29, 1996 to $9.5 million. The major variance was due to
the net reduction in short and long-term debt of $7.5 million in the current
quarter. In the prior year, net short and long-term debt increased by $1.2
million. Funds used for dividend payments increased by $0.1 million and $0.6
million was used to repurchase common stock of the Company. During the quarter
ended September 29, 1996, 36,000 shares of the Company's common stock were
repurchased at a cost of $0.6 million.
On October 23, 1996 the company's board of directors raised the
quarterly dividend on the company's common stock to $0.10 per share from $0.09
per share, for an indicated annual rate of $0.40 per share.
The company's financial position remains strong and the company believes
that the combination of its working capital, unused and available short-term
credit facilities and cash flow from operations will provide the capital
resources and liquidity to meet its needs.
6
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 15, Letters from Arthur Andersen LLP dated
November 5, 1996, regarding consent and unaudited
financial statements.
(b) No reports on Form 8-K have been filed during the quarter
for which this report is filed.
7
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
RIVIANA FOODS INC.
Dated: November 5, 1996 By: /s/ E. WAYNE RAY, JR.
E. Wayne Ray, Jr.
Vice President, Chief Financial Officer
and Chief Accounting Officer
8
EXHIBIT INDEX
Sequential
No. Description Page Number
- --- ----------- -----------
15 Letters from Arthur Andersen LLP dated November 5, 1996,
regarding consent and unaudited financial statements .......... 10
9
EXHIBIT 15
November 5, 1996
Riviana Foods Inc.:
We are aware that Riviana Foods Inc. has incorporated by reference in its Form
S-8 Registration Statement covering the 1994 Stock Option Plan its Form 10-Q for
the quarter ended September 29, 1996, which includes our report dated November
5, 1996, covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933, that report is not
considered a part of the registration statement prepared or certified by our
firm or a report prepared or certified by our firm within the meaning of
Sections 7 and 11 of the Act.
Very truly yours,
Arthur Andersen LLP
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Riviana Foods Inc.:
We have reviewed the accompanying consolidated balance sheet of Riviana Foods
Inc. (a Delaware corporation) and subsidiaries as of September 29, 1996, and the
related consolidated statements of income and cash flows for the three-month
periods ended September 29, 1996, and October 1, 1995. These consolidated
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Houston, Texas
November 5, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RIVIANA FOODS INC'S FIRST QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-29-1997
<PERIOD-END> SEP-29-1996
<CASH> 1,536
<SECURITIES> 8,152
<RECEIVABLES> 40,338
<ALLOWANCES> 459
<INVENTORY> 56,256
<CURRENT-ASSETS> 110,488
<PP&E> 89,986
<DEPRECIATION> 35,018
<TOTAL-ASSETS> 183,200
<CURRENT-LIABILITIES> 51,191
<BONDS> 0
0
0
<COMMON> 15,883
<OTHER-SE> 101,683
<TOTAL-LIABILITY-AND-EQUITY> 183,200
<SALES> 105,005
<TOTAL-REVENUES> 105,005
<CGS> 78,441
<TOTAL-COSTS> 21,433
<OTHER-EXPENSES> (135)
<LOSS-PROVISION> 31
<INTEREST-EXPENSE> 560
<INCOME-PRETAX> 4,996
<INCOME-TAX> 1,686
<INCOME-CONTINUING> 3,240
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,240
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
