SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 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 RIVIANA FOODS INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0177572
(State of Incorporation) (I.R.S. Employer Identification No.)
2777 ALLEN PARKWAY
HOUSTON, TX 77019-2141
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 529-3251
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class )
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
As of September 17, 1996 the aggregate market value of the Registrant's
voting stock held by non-affiliates of the Registrant was approximately
$98,557,000 .
The number of shares of Common Stock of the Registrant, par value $1.00
per share, outstanding at September 17, 1996 was 15,867,090.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Stockholders for the fiscal
year ended June 30, 1996 (the "1996 Annual Report") are incorporated by
reference into Part I, Item 1; Part II, Items 5, 7 and 8; and Part IV, Item 14.
Portions of Registrant's definitive Proxy Statement for the 1996 Annual
Meeting of Stockholders to be held October 23, 1996 (the "Proxy Statement") are
incorporated by reference into Part III, Items 10, 11, 12 and 13.
1
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PART I
ITEM 1. BUSINESS.
Riviana Foods Inc. ("Riviana", the "Company", or the "Registrant") was
incorporated on January 31, 1986. The Company's predecessors date back to 1911
when Frank A. Godchaux began the amalgamation of 25 rice mills in southwest
Louisiana.
Riviana processes, markets and distributes rice products in the United
States, cookies, crackers, fruit juices, nectars and drinks, and processed
fruits and vegetables in Central America, and rice and other food products in
Europe. For fiscal 1996, the Company's domestic operations accounted for
approximately 58% and 76% of net sales and operating income before general
corporate expenses, respectively, and international operations accounted for
approximately 42% and 24% of net sales and operating income before general
corporate expenses, respectively. Financial segment information by geographic
area for the most recent three fiscal years is set forth on page 30, Note 13,
"Segment information," of the Company's Annual Report to Stockholders for the
fiscal year ended June 30, 1996 (the "Annual Report"). Such information is
incorporated herein by reference.
Riviana's domestic operations consist of sales of retail branded and
private-label rice products, sales of rice products to retail food service
chains, sales of rice and rice by-products to major food processors and other
industrial users and exports of branded and value-added bulk rice products to
Puerto Rico and a number of international markets. Sales of retail branded and
private-label rice products represent the most significant component of the
Company's domestic operations, accounting for approximately 43% of the Company's
total net sales during fiscal 1996.
By volume, Riviana is the largest seller of retail branded and
private-label rice products in the United States, offering a variety of products
in each of the retail rice industry's four categories: dried rice (milled white
and parboiled rice), instant rice (rice that cooks in 10 minutes or less),
prepared rice (specialty mixes) and brown rice.
The Company's domestic sales by hundredweight ("cwt") of retail rice
products have grown at a compound annual rate of 5% from fiscal 1992 to 1996.
The Company believes its consistent growth has resulted from its longstanding
national presence and reputation for quality, and its ability to develop and
market easy-to-prepare, value-added instant and specialty mix products. Sales of
instant and specialty mixes have enjoyed particularly strong growth, increasing
at a compound annual rate of 11% from fiscal 1992 to 1996. The Company believes
its strong growth in the instant and specialty categories stems in part from a
shift in consumer preferences toward more healthful, flavorful, easy-to-prepare
food products.
The Company markets its branded products under a number of nationally
recognized brand names including:
MAHATMA(R) - the volume leader of packaged long grain rice sold
in the retail grocery trade. SUCCESS(R) - the leading brand of
instant boil-in-bag rice and the second leading brand of instant
rice in the U.S. CAROLINA(R) - the second leading brand of
packaged long grain rice in the northeastern U.S. WATERMAID(R) -
the leading brand of medium grain rice in the southeastern U.S.
RIVER(R) - the second leading brand of packaged medium grain rice
in the northeastern U.S.
Riviana also markets a variety of easy-to-prepare, flavored rice mixes
under the Mahatma(R) and Success(R) brand names, including Mahatma(R) brand
Yellow Rice, Red Beans & Rice and Black Beans & Rice, and Success(R) brand Brown
& Wild Rice and Broccoli & Cheese Rice.
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In addition to its branded products, the Company supplies a full range
of private-label rice products--dried rice, instant rice, rice mixes and brown
rice--to numerous food retailers, including 19 of the top 20 supermarket chains
in the United States.
The Company supplies parboiled and instant rice in bulk to a number of
the nation's major food processors for use as an ingredient in other food
products. The Company also markets a range of food service products, principally
instant rice, parboiled rice, and rice mixes, to several of the top restaurant
chains and food service companies in the United States, and sells bulk rice and
rice by-products to industrial users.
Riviana exports brand name and value-added bulk rice products to Puerto
Rico and a number of foreign countries. The Company's Puerto Rican brands, El
Mago(R), Sello Rojo(R) and Mahatma(R), represent approximately 20% of the total
Puerto Rican retail rice market, where per capita rice consumption is
approximately five times the United States level. The Company also exports
brand-name and private-label rice products to Canada, Mexico and countries in
the Caribbean, Europe, Africa and the Middle East.
The Company's Costa Rican subsidiary, Pozuelo, S.A. ("Pozuelo"), is one
of the largest manufacturers of cookies and crackers in Central America. Costa
Rica is Pozuelo's largest market, followed by Guatemala and El Salvador. The
Company has committed significant resources to Pozuelo in the past five years to
modernize its facilities and convert it into a modern, efficient baking
operation. Pozuelo's principal brands are Riviana Pozuelo(R) soda crackers and
saltines, Bokitas(R) oil sprayed crackers, Familia(R) assortments of sweet
biscuits, and Chiky(R), which is a chocolate- enrobed sweet biscuit. Its newest
product, a vanilla flavored cookie, is marketed under the Tipo(R) brand. Many of
these products are market leaders in Central America. Pozuelo's sales, expressed
in dollars, have grown at a compound annual rate of 10.5% for the past five
fiscal years.
The Company's Guatemalan subsidiary, Alimentos Kern de Guatemala, S.A.
("Kern"), is one of the largest fruit and vegetable processing operations in
Central America. Kern produces a wide variety of products, including fruit
juices and nectars, fruit drinks, tomato products (sauces, ketchup and paste),
canned vegetables and refried beans. Kern's products are sold principally in
Central America with its largest markets being Guatemala, Costa Rica and El
Salvador. Exports, including refried beans exported to the United States,
represent a growing part of Kern's business. Many of Kern's primary brand name
products are market leaders in Central America in their respective categories.
Kern's sales, expressed in dollars, have grown at a compound annual rate of
10.1% for the past five fiscal years.
The Company's subsidiaries in Central America accounted for
approximately 16% of net sales and 19% of operating income before general
corporate expenses in fiscal 1996.
The Company's Belgian subsidiary, N & C Boost N.V. ("N&C"), competes in
the continental European rice market through its management of Boost
Distribution C.V. ("Boost"). Boost is accounted for as an unconsolidated
affiliate and is jointly owned by N&C and Arrocerias Herba, S.A., a major
European rice miller and marketer. Boost buys parboiled and regular brown rice
in bulk, which it then mills, packages and markets under its own and
private-label brand names and in bulk. Boost markets its own brand name,
Bosto(R), which is the leading brand of consumer packaged rice in Belgium.
Boost's Boss(R) brand canned cream rice is the leading canned creamed rice in
Belgium. Boost also distributes bulk and private-label packaged rice to major
retailers in Europe. The Boost joint ownership agreement provides that after
January 1, 1997, each party has certain rights to buy the other's interest or
require the other to buy its interest. N&C also owns a one-third interest in
Herto N.V., a major European rice cake manufacturer.
Stevens & Brotherton Ltd. ("S&B"), the Company's United Kingdom
subsidiary, is a distribution company that distributes a variety of brand name
and private-label products including packaged rice, dried fruits and nuts, and
canned fruits, vegetables, meats and fish to retail, wholesale, food service and
industrial customers in the United Kingdom. The products distributed by S&B are
all produced by other manufacturers and generate a lower gross profit margin
than other Riviana operations.
The Company's European operations accounted for approximately 26% of net
sales and 5% of operating income before general corporate expenses in fiscal
1996.
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Financial segment information by geographic area for the most recent
three fiscal years is set forth on page 30, Note 13, "Segment information", of
the Annual Report and is incorporated herein by reference.
The Company is exposed to certain political, economic and other risks
inherent in doing business abroad, including exposure to currency exchange rate
fluctuations, currency exchange restrictions, potentially unfavorable changes in
tax or other laws, partial or total expropriation, and the risks of war,
terrorism and other civil disturbances. Additional information related to this
matter is set forth on page 13 of Management's Discussion and Analysis of
Financial Condition and Results of Operations under the caption "General" in the
Annual Report and is incorporated herein by reference. The Company's strategies
for minimizing the effect of currency rate fluctuations are to borrow in local
currencies, denominate accounts receivable in local currencies and hedge certain
short-term foreign product procurement commitments with specific currency
exchange contracts. Currency rate fluctuations have not materially impacted the
historical results of operations. The functional currencies of the Company's
foreign subsidiaries are as follows: United Kingdom--pound sterling,
Belgium--Belgian franc, Costa Rica--colon, and Guatemala--quetzal.
The Company has a large customer base that includes retail supermarket
chains, wholesalers, industrial ingredient users, restaurant chains, breweries
and other food processors. No customer, domestic or international, accounted for
more than 5% of the Company's consolidated revenues in fiscal 1996.
In the United States, the Company supports its branded business
primarily with regional media advertising and trade and consumer promotions,
including significant coupon and product tie-in programs. These programs are
coordinated by Company marketing and sales departments through nine regional
managers and a national network of food brokers.
The Company's sales of retail rice products are executed on a purchase
order basis, although the Company does have a limited number of short-term (one
year or less) contracts under which it supplies rice products to industrial
customers. The Company's sales of retail rice products are conducted through
independent food brokers, who are coordinated by the Company's regional sales
managers. Products are distributed through a nationwide network of Company and
public warehouses.
The Company buys rough rice from a variety of farm sources, primarily in
Arkansas and Louisiana. No single source accounts for more than 11% of rough
rice purchases. In addition to milling rice in its own facilities, the Company
purchases significant amounts of rice milled to the Company's specifications
from a number of the leading rice milling companies in the United States. In
fiscal 1996, the Company purchased approximately 85% of its milled rice from
three suppliers. The Company believes adequate alternative sources of supply are
readily available.
The Company's competitive position depends largely on continued consumer
brand loyalty and its ability to introduce and gain customer acceptance for new
products. The Company competes with three major industry leaders and with
several regional competitors on the basis of price, quality, brand name
recognition, availability of products, and product innovation.
Mars, Inc., through its subsidiary Uncle Ben's, Inc., is the largest
seller of branded rice in the industry measured in dollars. The Company is the
industry leader in sales of branded rice measured by volume. Kraft General
Foods, a subsidiary of Philip Morris Companies, Inc., produces the leading brand
of instant rice (Minute), and The Quaker Oats Company produces the leading brand
of rice mixes (Rice-A-Roni).
The Company's Central American subsidiaries have local competitors, some
of which are affiliated with multinational companies. New competition has come
from an influx of international brands imported from the United States, Mexico
and South America attributable largely to declining import duties in Central
America.
In Belgium, Boost competes with branded products from Master Foods (a
subsidiary of Mars, Inc.) as well as branded products packaged by other European
millers and processors. In the United Kingdom, S&B competes with European rice
millers, including mills in the United Kingdom, from which it also purchases
rice, for its share of the rice market. In the private-label market for products
other than rice, S&B competes with importers representing world-wide
manufacturing operations that process fruits, vegetables and other food
products.
4
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Although the Company is not involved in rice farming, certain government
regulations affecting United States rice farmers have an impact on the Company's
cost of raw materials. Substantially all rice grown in the United States is
influenced by government programs.
In April 1996, the Federal Agriculture Improvement and Reform Act ("1996
Farm Bill") was enacted to replace the 1990 predecessor, the Food, Agriculture,
Conservation and Trade Act of 1990 ("1990 Farm Bill"). The 1996 Farm Bill
provides marketing loans and agricultural marketing transition payments (as
defined) to qualifying farmers for seven years beginning with the 1996 crop. The
agricultural market transition payments range on a declining scale from $2.75
per cwt for the 1996 crop to $2.03 per cwt in 2002 and replace similar payments
of the 1990 Farm Bill. Unlike the payments under the 1990 Farm Bill, the
agricultural market transition payments are fixed without reference to price
levels. Other important provisions of the 1996 Farm Bill include the elimination
of acreage reduction incentives and increased flexibility of farmers to plant
different crops other than rice as market conditions warrant. The changes
introduced by the 1996 Farm Bill may have a significant impact on the supply and
price level of rice grown in the United States.
The Company is subject to various federal, state and local environmental
laws and regulations concerning air quality, water quality, and the generation,
use and disposal of materials relating to plant operations and to the processing
of rice. The Company procures and maintains the necessary environmental permits
and licenses in order to operate its facilities and considers itself to be in
compliance in all material respects with those environmental laws and
regulations currently applicable to its business and operations. Such compliance
has not materially affected the Company's business, financial condition or
results of operations.
The manufacture and marketing of the Company's products are subject to
regulation in the United States by federal regulatory agencies, including the
Environmental Protection Agency, the Occupational Safety and Health
Administration, the Food and Drug Administration ("FDA"), and by various state
and local authorities. The FDA also regulates the labeling of the Company's
products. The Company's operations outside the United States are subject to
similar regulation in a number of countries. Compliance with existing
requirements of such governmental bodies has not materially affected the
Company's capital expenditures, earnings or competitive position.
The Company's brands are protected by numerous trademark registrations
in the United States and foreign jurisdictions. The Company believes that its
registered trademarks have significant value, and are adequate to protect the
brand names significant to its business.
As of August 31, 1996, the Company employed approximately 2,426
employees, 25% of whom were covered by collective bargaining agreements. In
Houston, Texas, the Company is a party to collective bargaining agreements with
General Drivers, Warehousemen and Helpers Teamsters Local Union No. 968,
covering a total of 219 employees. In Memphis, Tennessee, the Company is a party
to a collective bargaining agreement with Teamsters Local Union No. 1196
covering 107 employees. In Guatemala, Kern is a party to a collective bargaining
agreement with a local union covering 282 employees. The Company believes its
labor relations are good.
5
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ITEM 2. PROPERTIES.
The following table lists the Company's principal properties, all of
which are owned unless otherwise indicated.
Location Nature of Facility Square Footage
-------- ------------------ --------------
Houston, Texas Processing, packaging, technical 170,600
center, warehouse
Houston, Texas(1) Corporate headquarters 52,100
Abbeville, Louisiana Processing, packaging, warehouse 137,200
Memphis, Tennessee Packaging, warehouse 99,700
Carlisle, Arkansas Processing 47,500
Edison, New Jersey(1) Warehouse 94,500
Orpington, England(1) Trading office 11,100
Bristol, England(2) Distribution 210,000
San Jose, Costa Rica Production, packaging, warehouse 257,000
Guatemala City, Guatemala Production, packaging, warehouse 267,000
- ---------------
(1) Leased facility.
(2) Contracted space and services.
In addition to the properties listed in the table, the Company owns six
drying and storage facilities strategically located in the rice growing region
of the southeastern United States, and leases warehouse facilities in Houston
and Memphis.
ITEM 3. LEGAL PROCEEDINGS.
The Company is from time to time subject to claims and suits arising in
the ordinary course of business. The Company is not currently a party to any
proceeding which, in management's opinion, would have a material adverse effect
on the Company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of the fiscal year ended June 30, 1996, no
matter was submitted to a vote of the stockholders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information relating to the Company's common stock is set forth on pages
28 through 29 in Note 11, "Capital stock", and on page 31 in Note 14, "Selected
quarterly financial data (unaudited)", of the Annual Report and is incorporated
herein by reference.
On August 16, 1996, the Board of Directors declared a quarterly cash
dividend of $.0900 per common share payable October 24, 1996 to stockholders of
record on September 10, 1996.
The Company has a continuing stock repurchase program which it announced
on August 21, 1995. The program authorizes the repurchase of up to 500,000
shares of the Company's common stock from time to time. The Company has
repurchased 64,000 shares as of September 24, 1996. The Company expects to
finance any future repurchases from working capital, unused short-term credit
lines and cash flow from operations.
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ITEM 6. SELECTED FINANCIAL DATA.
The following table represents selected consolidated financial data for
the Company and its subsidiaries for each of the five fiscal years 1992 through
1996. All amounts are in thousands except per share data.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales ......................... $440,492 $427,229 $419,143 $378,730 $340,002
Income before extraordinary item .. 18,342 14,931 17,480 13,176 11,034
Net income ........................ 18,342 14,931 16,443 13,176 11,034
Earnings per share:
Income before extraordinary item 1.16 0.96 1.14 0.86 0.72
Net income ..................... 1.16 0.96 1.07 0.86 0.72
BALANCE SHEET DATA (AT END OF YEAR):
Total assets ...................... $182,504 $175,683 $175,635 $162,886 $167,734
Short-term debt and Current
maturities of long-term debt ... 13,031 13,276 31,597 19,023 24,957
Long-term debt, net of current
maturities ..................... 3,644 2,372 2,432 25,592 27,775
Total debt ........................ 16,675 15,648 34,029 44,615 52,732
Stockholders' equity .............. 116,506 106,795 90,654 74,449 68,063
Dividends paid per share .......... 0.3466 0.2499 0.2000 0.1830 0.1670
</TABLE>
The above information is presented using the FIFO (first-in, first-out)
method to determine the cost of domestic rice inventories. Subsequent to fiscal
1995 year end, the Company changed its accounting method from LIFO (last-in,
first-out) to FIFO. The above information has been restated to reflect the
restatement of the consolidated financial statements for the change in method of
accounting for domestic rice inventories.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This information is set forth in the Management's Discussion and
Analysis of Financial Condition and Results of Operations section on pages 13
through 16 of the Annual Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Balance Sheets of the Company and its subsidiaries as
of June 30, 1996 and July 2, 1995 and the related Consolidated Statements of
Income, Capital Accounts and Retained Earnings, Other Equity Accounts and Cash
Flows for the fiscal years ended June 30, 1996, July 2, 1995 and July 3, 1994,
together with the related Notes to Consolidated Financial Statements, included
in the Annual Report are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There is nothing to be reported under this item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information relating to the Directors of the Company is set forth under
the captions "General" and "The Company recommends Voting "FOR" the nominees" on
pages 4 through 5 in the Proxy Statement and is incorporated herein by
reference.
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ITEM 11. EXECUTIVE COMPENSATION.
Information relating to executive compensation is set forth under the
captions "Compensation Tables" and "Retirement Plan" on pages 9 through 11 in
the Proxy Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information relating to the ownership of equity securities of the
Company by certain beneficial owners and management is set forth under the
caption "Common Stock Outstanding and Principal Holders Thereof" on pages 1
through 3 in the Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information relating to certain relationships with a beneficial
stockholder and certain related transactions is set forth under the captions
"Compensation and Stock Option Committee Interlock and Insider Participation"
and "Certain Transactions" on pages 8 through 9 in the Proxy Statement and is
incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) The following financial statements and report included in the Annual
Report and are incorporated herein by reference.
<TABLE>
<CAPTION>
Page No.
in the
Annual Report
-------------
<S> <C>
Consolidated Balance Sheets as of June 30, 1996, and July 2, 1995 ................... 17
Consolidated Statements of Income for the fiscal years ended
June 30, 1996, July 2, 1995, and July 3, 1994 .................................. 18
Consolidated Statements of Capital Accounts and Retained Earnings for the fiscal years
ended June 30, 1996, July 2, 1995, and July 3, 1994 ............................ 19
Consolidated Statements of Other Equity Accounts for the fiscal years ended
June 30, 1996, July 2, 1995, and July 3, 1994 ................................... 19
Consolidated Statements of Cash Flows for the fiscal years ended
June 30, 1996, July 2, 1995, and July 3, 1994 ................................... 20
Notes to Consolidated Financial Statements ........................................... 21
Report of Independent Public Accountants ............................................. 32
</TABLE>
(2) The following report and schedule are filed herewith as a part hereof:
Independent Accountants' Report of Arthur Andersen LLP dated
August 12, 1996, on the Company's consolidated financial
statement schedule filed as a part hereof for the fiscal years
ended June 30, 1996, July 2, 1995, and July 3, 1994
Schedule II (Valuation and Qualifying Accounts - Allowance for
Doubtful Accounts) for the fiscal years ended June 30, 1996, July
2, 1995 and July 3, 1994
All other schedules are omitted because they are not applicable or the
required information is included herein or is shown in the consolidated
financial statements or notes thereto incorporated herein by reference.
(3)Exhibits required to be filed by Item 601 of Regulation S-K are listed
below and are filed as a part hereof. Documents not designated as being
incorporated herein by reference are filed herewith. The paragraph
numbers correspond to the exhibit numbers designated in Item 601 of
Regulation S-K.
3(i) The Company's Restated Certificate of Incorporation dated
December 28, 1994 is incorporated herein by reference to Exhibit
3.01 to the Company's Registration Statement on Form S-1, NO.
33-87838 under the Securities Act of 1933, as amended (the
"Registration Statement")
3(ii) The Company's By-laws, as amended effective May 17, 1995, is
incorporated herein by reference to Exhibit 3(ii) to the
Company's Annual Report on Form 10-K for the fiscal year ended
July 2, 1995
*10(i) Consulting Agreement between Riviana Foods Inc. and Frank A.
Godchaux III dated January 1, 1996
*10(ii) Consulting Agreement between Riviana Foods Inc. and Charles R.
Godchaux dated July 1, 1994 is incorporated herein by reference
to Exhibit 10.02 to the Registration Statement
*10(iii)Benefit Restoration Plan is incorporated herein by reference to
Exhibit 10.03 to the Registration Statement
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*10(iv) Management Security Agreement between the Registrant and Joseph
A. Hafner, Jr. dated July 17, 1989 is incorporated herein by
reference to Exhibit 10.04 to the Registration Statement
10(v) Shareholders Agreement between Sun-Land Products of California
and Stevens & Brotherton Ltd. dated March 24, 1994 is
incorporated herein by reference to Exhibit 10.05 to the
Registration Statement
10(vi) Shareholder Agreement among N&C Boost N.V., Arrocerias Herba,
S.A. and Ricegrowers' CoOperative Limited dated January 29, 1992
is incorporated herein by reference to Exhibit 10.06 to the
Registration Statement
10(vii)Stock Purchase Agreement by and among N&C Boost N.V., Riceherba
International Inc. and Ricegrowers' Co-Operative Limited dated as
of January 29, 1992 is incorporated herein by reference to
Exhibit 10.07 to the Registration Statement
10(viii) Shareholder Agreement among N&C Boost N.V., Arrocerias Herba,
S.A. and Herto B.V.B.A. dated January 1, 1991, as amended, is
incorporated herein by reference to Exhibit 10.08 to the
Registration Statement
10(ix) Agreement of Partnership between Riviana Foods Inc. and Kennedy
Rice Dryers, Inc. dated February 12, 1990 is incorporated herein
by reference to Exhibit 10.09 to the Registration Statement
10(x) Partnership Agreement between Riviana Foods Inc. and Riceland
Foods Inc. dated March 22, 1989 is incorporated herein by
reference to Exhibit 10.10 to the Registration Statement
*10(xi) 1994 Stock Option Plan is incorporated herein by reference to
Exhibit 10.11 to the Registration Statement
*10(xii)Amendment and Restatement of Executive Officer's Stock Purchase
Agreement between Riviana Foods Inc. and W. David Hanks dated
December 15, 1994 is incorporated herein by reference to Exhibit
10.12 to the Registration Statement
*10(xiii) Amendment and Restatement of Executive Officer's Stock
Purchase Agreement between Riviana Foods Inc. and Jack M.
Nolingberg dated December 15, 1994 is incorporated herein by
reference to Exhibit 10.13 to the Registration Statement
*10(xiv)Amendment and Restatement of Executive Officer's Stock Purchase
Agreement between Riviana Foods Inc. and Robert D. Watts dated
December 15, 1994, as amended, is incorporated herein by
reference to Exhibit 10.14 to the Registration Statement
*10(xv) Director's Stock Purchase Agreement between Riviana Foods Inc.
and W. Elton Kennedy dated March 27, 1986 is incorporated herein
by reference to Exhibit 10.15 to the Registration Statement
*10(xvi)Amended and Restated 1995 Non-Employee Director Stock Option
Plan dated May 17, 1996
13. Pages 13 through 32 of Riviana Foods Inc. Annual Report to
Stockholders for the fiscal year ended June 30, 1996, portions
of which are incorporated by reference. Those portions of the
Annual Report to Stockholders that are not incorporated herein
by reference shall not be deemed to be filed as part of this
Report.
21. A list of the subsidiaries of the Registrant is incorporated
herein by reference to Exhibit 21.01 to the Registration
Statement
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23. The following Exhibit is filed by incorporation by reference to
Item 14(a)(2) of this Report: (a) Consents of Arthur Andersen
LLP
24. Powers of Attorney of the Company's directors
(b) None
- ----------------------
* A management contract, compensatory plan or arrangement
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on September 25, 1996.
RIVIANA FOODS INC.
(Registrant)
By /s/ JOSEPH A. HAFNER, JR.
JOSEPH A. HAFNER, JR.
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, on September 25, 1996.
Signature Capacity
/s/ JOSEPH A. HAFNER, JR. Chief Executive Officer, President and Director
JOSEPH A. HAFNER JR. (Principal Executive Officer)
/s/ W. DAVID HANKS Executive Vice President and Director
W. DAVID HANKS
/s/ E. WAYNE RAY, JR. Vice President, Chief Financial Officer, Treasurer and
E. WAYNE RAY, JR. Director (Principal Financial and Accounting Officer)
*Frank A. Godchaux III Chairman of the Board
*Charles R. Godchaux Vice Chairman of the Board
*Leslie K. Godchaux Director
*Theresa G. Payne Director
*W. Elton Kennedy Director
*E. James Lowrey Director
*Patrick W. Rose Director
*Thomas B. Walker, Jr. Director
*By /s/ ELIZABETH B. WOODARD
ELIZABETH B. WOODARD
(AS ATTORNEY-IN-FACT FOR EACH OF THE PERSONS INDICATED)
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Riviana Foods Inc.:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Riviana Foods
Inc.'s Annual Report to Stockholders incorporated by reference in this Form
10-K, and have issued our report thereon dated August 12, 1996. Our audits were
made for the purpose of forming an opinion on those statements taken as a whole.
Financial statement Schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
consolidated financial statements. This financial statement schedule has been
subjected to the auditing procedures applied in the audits of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
August 12, 1996
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the
incorporation by reference in this Form 10-K of our report dated August 12, 1996
included in the Company's Annual Report to Stockholders for the fiscal year
ended June 30, 1996. It should be noted that we have not audited any
consolidated financial statements of the Company subsequent to June 30, 1996 or
performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Houston, Texas
September 24, 1996
CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the
incorporation of our reports included in or incorporated by reference in this
Form 10-K, into the Company's previously filed Registration Statement File No.
33302484.
ARTHUR ANDERSEN LLP
Houston, Texas
September 24, 1996
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SCHEDULE II
RIVIANA FOODS INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS - ALLOWANCE FOR DOUBTFUL ACCOUNTS
(THOUSANDS OF DOLLARS)
Additions
-----------------------
Charged
(credited)
to other
CHARGED accounts - Deductions - Balance
Balance at (CREDITED) foreign write-offs, at
beginning TO COSTS currency net of end
Period of period and expenses translation recoveries of period
- ------ --------- ------------ ----------- ------------ ---------
1994 $479 $256 $3 ($67) $671
1995 671 (53) (115) 503
1996 503 (9) (6) (69) 419
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EXHIBIT 10(i)
January 1, 1996
Mr. Frank A. Godchaux III
600 Fifth Street
Abbeville, Louisiana 70510
RE: CONSULTING AGREEMENT
Dear Frank:
Riviana Foods Inc. (the "Company") and you desire to enter into this
Letter Agreement pursuant to which you will perform consulting services for the
Company for the period commencing on January 1, 1996 for a term of one (1) year.
Accordingly, the Company and you hereby agree as follows:
1. You will perform consulting services as requested by Riviana
Management ("Consulting Services").
2. For such Consulting Services during the term hereof, the Company
shall pay you at the rate of $90,000 per year (or portion thereof prorated) on a
semimonthly basis, provided, however, that the Company may, from time to time,
in its discretion, pay you up to 75% of such fee not more than one year in
advance of the time it is otherwise due and payable. The Company shall also
reimburse you for approved travel, telephone and related expenses incurred by
you in the performance of such Consulting Services and in accordance with the
Company's then applicable standards, policies and procedures. You shall be
responsible for all expenses related to the Consulting Services except those
which the Company has agreed to reimburse.
3. It is anticipated that you will consult on an "as needed" basis
depending upon your availability and the demands of the Consulting Services. You
shall, however, have no specific obligation regarding office hours nor shall the
Company exercise any direct supervision over you in the performance of the
Consulting Services.
4. During the term hereof, you agree not to provide similar services to
any other rice company or otherwise engage in competitive activity without the
prior written consent of the Company.
5. The Company may provide you with secretarial services needed for your
performance of the Consulting Services, but you are not obligated to use such
services.
6. The Agreement shall be automatically renewed annually unless
terminated by either party.
7. You will treat all Company matters in a highly confidential manner.
8. This Agreement shall be governed and construed in accordance with the
laws of the State of Texas without giving effect to Texas conflict of laws
principles.
Please indicate your agreement by signing and returning a copy to me.
Yours very truly,
RIVIANA FOODS INC.
By: /S/ JOSEPH A. HAFNER, JR.
Joseph A. Hafner, Jr.
President
The foregoing agreement is hereby accepted and agreed.
/S/ FRANK A. GODCHAUX III
Frank A. Godchaux III, Consultant
EXHIBIT 10.xvi
RIVIANA FOODS INC.
AMENDED AND RESTATED
1995 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
MAY 17, 1996
1. PURPOSE.
This 1995 Non-Employee Director Stock Option Plan (this "Plan") of
Riviana Foods Inc., a Delaware corporation (the "Corporation"), is adopted,
subject to stockholder approval, for the benefit of the Directors of the
Corporation who are not employees of the Corporation or any of its subsidiaries
and who beneficially own less than two (2%) percent of the outstanding Common
Stock of the Corporation ("Non-Employee Directors"). This Plan is intended to
advance the interests of the Corporation by providing the Non-Employee Directors
with additional incentive to serve the Corporation by increasing their
proprietary interest in the success of the Corporation. This Plan was amended
and restated as set forth in full herein effective May 17, 1996.
2. ADMINISTRATION.
This Plan shall be administered by a committee to be appointed by the
Board of Directors of the Corporation (the "Committee"), the members of which
shall consist of not less than two members of the Board of Directors. For the
purposes of this Plan, a majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of those members present at any meeting shall decide any question brought before
that meeting. No member of the Committee shall be liable for any act or omission
of any other member of the Committee or for any act or omission on his own part,
including (without limitation) the exercise of any power or discretion given to
him under this Plan, except those resulting from his own gross negligence or
willful misconduct. All questions of interpretation and application of this
Plan, or as to options granted hereunder (the "Options"), shall be subject to
the determination, which shall be final and binding, of a majority of the whole
Committee. Notwithstanding the above, the selection of Non- Employee Directors
to whom Options are to be granted, the number of shares subject to any Option,
the exercise price of any Option and the term of any Option shall be as
hereinafter provided and the Committee shall have no discretion as to such
matters.
3. OPTION SHARES.
The stock subject to the Options and other provisions of this Plan shall
be shares of the Corporation's Common Stock, $1.00 par value per share (or such
other par value as may be designated by act of the Corporation's stockholders,
the "Common Stock"). The total
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amount of Common Stock with respect to which Options may be granted shall not
exceed 250,000 shares in the aggregate; PROVIDED, that the class and aggregate
number of shares which may be subject to the Options granted hereunder shall be
subject to adjustment in accordance with the provisions of Section 12 of this
Plan. Such shares may be treasury shares or authorized but unissued shares.
If any outstanding Option for any reason shall expire or terminate by
reason of the death of the optionee, the fact that the optionee ceases to be a
Director, the surrender by the optionee of any such Option, or by any other
cause, the shares of Common Stock allocable to the unexercised portion of such
Option may again be subject to an Option under this Plan.
4. GRANT OF OPTIONS.
(a) DIRECTORS ON THE EFFECTIVE DATE OF THIS PLAN.
(i) Subject to the provisions of Section 15 hereof, there shall
be granted to each person who is a Non-Employee Director upon the effective date
of this Plan an Option to purchase 5,000 shares of Common Stock at a per share
Option Price equal to the fair market value (as defined in Subsection 4(c)
below) of a share of Common Stock on such date.
(ii) For so long as this Plan is in effect and shares are
available for the grant of Options hereunder, on May 17, 1996, there shall be
granted to each person who is a Non- Employee Director on the effective date of
this Plan an Option to purchase 5,000 shares of Common Stock, and on May 17 of
each year beginning May 17, 1996, there shall be granted to each person who is a
Non-Employee Director on the effective date of this Plan an Option to purchase
2,000 shares of Common Stock, each grant to be made at a per share Option Price
equal to the fair market value of a share of the Corporation's Common Stock on
such date (such number of shares being subject to the adjustments provided in
Section 12 of this Plan).
(iii) Notwithstanding Subsections 4(a)(i) and 4(a)(ii) above,
subject to the adjustments provided in Section 12 of this Plan, the aggregate
number of shares of Common Stock for which Options may be granted under this
Plan to a person who is a Non-Employee Director upon the effective date of this
Plan shall not exceed, during the lifetime of his service as a Director to the
Corporation, 23,000 shares.
(b) DIRECTORS ELECTED AFTER THE EFFECTIVE DATE OF THIS PLAN.
(i) Subject to the provisions of Section 15, for so long as this
Plan is in effect and shares are available for the grant of Options thereunder,
each person who shall become a Non-Employee Director after the effective date of
this Plan shall be granted, on the date of his election, an Option to purchase
2,000 shares of Common Stock at a per share
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Option Price equal to the fair market value of a share of Common Stock on such
date (such number of shares being subject to the adjustments provided in Section
12 of this Plan).
(ii) For so long as this Plan is in effect and shares are
available for the grant of Options hereunder, on May 17 of each year beginning
the year after his election as a Director, there shall be granted to each person
who shall become a Non-Employee Director after the effective date of this Plan
and is a Non-Employee Director on such May 17 an Option to purchase 2,000 shares
of Common Stock at a per share Option Price equal to the fair market value of a
share of Common Stock on such date (such number of shares being subject to the
adjustments provided in Section 12 of this Plan).
(iii) Notwithstanding Subsections 4(b)(i) and 4(b)(ii), subject
to the adjustments provided in Section 12 of this Plan, the aggregate number of
shares of Common Stock for which Options may be granted under this Plan to a
person who shall become a Non-Employee Director after the effective date of this
Plan shall not exceed, during the lifetime of his service as a Director to the
Corporation, 50,000 shares.
(c) FAIR MARKET VALUE. For purposes of this Section 4, the "fair market
value" of a share of Common Stock as of any particular date shall mean (i) if
the Common Stock is listed or admitted to trading on any securities exchange or
on the National Association of Securities Dealers (the "NASD") Automated
Quotation System ("Nasdaq") National Market, the closing price on such day on
the principal securities exchange or on the Nasdaq National Market on which the
Common Stock is traded or quoted, or if such day is not a trading day for such
securities exchange or the Nasdaq National Market, the closing price on the
first preceding day that was a trading day, (ii) if the Common Stock is not then
listed or admitted to trading on any securities exchange or on the Nasdaq
National Market, the closing bid price on such day as reported by the NASD, or
if no such price is reported by the NASD for such day, the closing bid price as
reported by the NASD on the first preceding day for which such price is
available, and (iii) if the Common Stock is not then listed or admitted to
trading on any securities exchange or on the Nasdaq National Market and no such
closing bid price is reported by the NASD, as determined by another reputable
quotation source selected by the Committee in good faith.
5. DURATION OF OPTIONS.
Each Option granted under this Plan shall be exercisable for a term of
ten years from the date such Option first becomes exercisable pursuant to
Section 6 hereof, subject to earlier termination as provided in Section 9 of
this Plan.
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6. AMOUNT EXERCISABLE.
Without respect to each Option granted pursuant to the Plan, the shares
subject to such Option shall vest and become exercisable as follows:
(i) The Option will vest equally over four years beginning on May 17 of
the fiscal year following the fiscal year, if any, in which the Corporation
achieves an increase in after-tax earnings per share of 10% or more over the
prior fiscal year. The determination of after-tax earnings per share in any
fiscal year shall be made consistently with determinations made in connection
with the measurement of the Corporation's performance under incentive
compensation plans for management of the Corporation, but shall not include any
extraordinary items as defined in accordance with generally accepted auditing
standards.
(ii) In the event less than all of the shares subject to an Option have
vested by the end of the ninth year after grant, any shares that have not vested
shall vest in full on the ninth anniversary of the date of grant; provided that
the optionee is then a Non-Employee Director.
7. EXERCISE OF OPTIONS.
Options shall be exercised by the delivery of written notice to the
Corporation setting out the number of shares with respect to which the Option is
to be exercised, together with: (a) cash, certified check, bank draft, or postal
or express money order payable to the order of the Corporation for an amount
equal to the Option Price of the shares or (b) any other form of payment which
is acceptable to the Committee, and specifying the address to which the
certificates for the shares are to be mailed. As promptly as practicable after
receipt of written notification and payment, the Corporation shall cause to be
delivered to the optionee certificates for the number of shares with respect to
which the Option has been exercised, issued in the optionee's name. Delivery
shall be deemed effected when a stock transfer agent of the Corporation shall
have deposited the certificates in the United States mail, addressed to the
optionee, at the address specified by the optionee.
8. TRANSFERABILITY OF OPTIONS.
Options shall not be transferable by the optionee otherwise than by will
or under the laws of descent and distribution, and shall be exercisable during
his lifetime, only by him.
9. TERMINATION.
Except as may be otherwise expressly provided in this Plan, each Option,
to the extent it shall not have been exercised previously, shall terminate on
the earlier of the following:
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(a) On the last day of the three-month period commencing on the
date on which the optionee ceases to be a member of the Corporation's Board of
Directors, for any reason other than the death or permanent disability of the
optionee, during which period the optionee shall be entitled to exercise all
Options held by the optionee on the date on which the optionee ceased to be a
member of the Corporation's Board of Directors which could have been exercised
on such date;
(b) On the last day of the one-year period commencing on the date
of the optionee's death or permanent disability while serving as a member of the
Corporation's Board of Directors, during which period the executor or
administrator of the optionee's estate or the person or persons to whom the
optionee's Option shall have been transferred by will or the laws of descent or
distribution, or the optionee or optionee's guardian, shall be entitled to
exercise all Options in respect of the number of shares that the optionee would
have been entitled to purchase had the optionee exercised such Options on the
date of his death or permanent disability; or
(c) Ten years after the date of grant of such Option.
10. REQUIREMENTS OF LAW.
The Corporation shall not be required to sell or issue any shares under
any Option if the issuance of such shares shall constitute a violation by the
optionee or the Corporation of any provisions of any law or regulation of any
governmental authority. Each Option granted under this Plan shall be subject to
the requirements that, if at any time the Board of Directors of the Corporation
or the Committee shall determine that the listing, registration or qualification
of the shares subject thereto upon any securities exchange or under any state or
federal law of the United States or of any other country or governmental
subdivision thereof, or the consent or approval of any governmental regulatory
body, or investment or other representations, are necessary or desirable in
connection with the issue or purchase of shares subject thereto, no such Option
may be exercised in whole or in part unless such listing, registration,
qualification, consent, approval or representation shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors. Any
determination in this connection by the Committee shall be final, binding and
conclusive. If the shares issuable on exercise of an Option are not registered
under the Securities Act of 1933, as amended (the "Securities Act"), the
Corporation may imprint on the certificate for such shares the following legend
or any other legend which counsel for the Corporation considers necessary or
advisable to comply with the Securities Act:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON SUCH
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REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO
THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR
TRANSFER.
The Corporation may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act (as now in effect or as
hereafter amended) and, if any shares are so registered, the Corporation may
remove any legend on certificates representing such shares. The Corporation
shall not be obligated to take any other affirmative action to cause the
exercise of an Option or the issuance of shares pursuant thereto to comply with
any law or regulation of any governmental authority.
11. NO RIGHTS AS STOCKHOLDER.
No optionee shall have rights as a stockholder with respect to shares
covered by his Option until the date of issuance of a stock certificate for such
shares; and, except as otherwise provided in Section 12 hereof, no adjustment
for dividends, or otherwise, shall be made if the record date therefor is prior
to the date of issuance of such certificate.
12. CHANGES IN THE CORPORATION'S CAPITAL STRUCTURE.
The exercise of outstanding Options shall not affect in any way the
right or power of the Corporation or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Corporation's capital structure or its business, or any merger or consolidation
of the Corporation, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the rights of the
Common Stock, or the dissolution or liquidation of the Corporation, or any sale
or transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
If the Corporation shall effect a subdivision or consolidation of shares
or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares by the Common Stock outstanding,
without receiving compensation for it in money, services or property, then (a)
the number, class and per share price of shares of stock subject to outstanding
Options under this Plan shall be appropriately adjusted in a manner as to
entitle an optionee to receive upon exercise of an Option, for the same
aggregate cash consideration, the same total number and class or classes of
shares as he would have received had he exercised his Option in full immediately
prior to the event requiring the adjustment; and (b) the number and class of
shares then reserved for issuance under this Plan shall be adjusted by
substituting for the total number and class of shares of stock then reserved the
number and class or classes of shares of stock that would have been received by
the owner
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of an equal number of outstanding shares of Common Stock as the result of the
event requiring the adjustment.
If the Corporation merges or consolidates with another corporation,
whether or not the Corporation is a surviving corporation, or if the Corporation
is liquidated or sells or otherwise disposes of substantially all its assets
while unexercised Options remain outstanding under the Plan, (a) subject to the
provisions of clause (c) below, after the effective date of the merger,
consolidation, liquidation, sale or other disposition, as the case may be, each
holder of an outstanding Option shall be entitled, upon exercise of an Option,
to receive, in lieu of shares of Common Stock, the number and class or classes
of shares of stock or other securities or property to which the holder would
have been entitled if, immediately prior to the merger, consolidation,
liquidation, sale or other disposition, the holder had been the holder of record
of a number of shares of Common Stock equal to the number of shares as to which
the Option may be exercised; (b) the Board of Directors may waive any
limitations set out in or imposed pursuant to this Plan so that all Options,
from and after a date prior to the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, specified by the
Board of Directors, shall be exercisable in full; and (c) all outstanding
Options may be canceled by the Board of Directors as of the effective date of
any merger, consolidation, liquidation, sale or other disposition.
Except as expressly provided before in this Plan, the issue by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services
either upon direct sale or upon the exercise of rights or warrants to subscribe
for shares, or upon conversion of shares or obligations of the Corporation
convertible into shares or other securities, shall not affect, and no adjustment
by reason of it shall be made with respect to, the number or price of shares of
Common Stock then subject to outstanding Options.
13. AMENDMENT OR TERMINATION OF PLAN.
The Board of Directors may modify, revise or terminate this Plan at any
time and from time to time; PROVIDED, HOWEVER, that without the further approval
of the holders of at least a majority of the outstanding shares of voting stock,
or if the provisions of the corporate charter, bylaws or applicable state law
prescribes a greater degree of stockholder approval for this action, without the
degree of stockholder approval thus required, the Board of Directors may not (a)
increase the benefits accruing to participants under this Plan; (b) increase the
number of shares of Common Stock which may be issued under this Plan; or (c)
modify the requirements as to eligibility for participation in this Plan,
unless, in each such case, the Board of Directors of the Corporation shall have
obtained an opinion of legal counsel to the effect that stockholder approval of
the amendment is not required (x) by law, (y) by the rules and regulations of,
or any agreement with, the National Association of Securities Dealers, Inc. or
(z) to make available to the optionee with respect to any option
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granted under this Plan, the benefits of Rule 16b-3 of the Rules and Regulations
under the Securities Exchange Act, or any similar or successor rule. In
addition, this Plan may not be amended more than once every six months with
respect to the plan provisions referred to in Rule 16b-3(c)(2)(ii)(A) of the
Rules and Regulations under the Securities Exchange Act other than to comport
with changes in the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder. All
Options granted under this Plan shall be subject to the terms and provisions of
this Plan and any amendment, modification or revision of this Plan shall be
deemed to amend, modify or revise all Options outstanding under this Plan at the
time of such amendment, modification or revision. If this Plan is terminated by
action of the Board of Directors, all outstanding Options may be terminated.
14. WRITTEN AGREEMENT.
Each Option granted hereunder shall be embodied in a written option
agreement, which shall be subject to the terms and conditions prescribed above,
and shall be signed by the optionee and by the appropriate officer of the
Corporation for and in the name and on behalf of the Corporation. Such an option
agreement shall contain such other provisions as the Committee in its discretion
shall deem advisable.
15. EFFECTIVE DATE OF PLAN.
This Plan became effective on May 17, 1995. The amendment and
restatement of this Plan is effective as of May 17, 1996. No Option shall be
granted pursuant to this Plan on or after May 17, 2005.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and the related notes.
GENERAL
The Company operates on a 52/53 week fiscal year ending on the Sunday closest to
June 30. This period is utilized because it closely coincides with the rice crop
year in the southern United States and rice is the largest component of the
Company's business. In fiscal 1996, the Company changed its accounting method
used to determine the cost of its domestic rice inventories from last-in,
first-out ("LIFO") to first-in, first-out ("FIFO"). Domestic rice inventories
comprise about 62.4% of consolidated inventories at June 30, 1996, and sales and
operating profits of the domestic rice segment account for approximately 57.8%
and 67.4% of the consolidated results for the year ended June 30, 1996. The
Company believes this change in accounting method will more clearly reflect its
results of operations and financial position. All prior period financial
statements have been restated to reflect the effects of this change in
accounting method. The Company made this change in accounting method because
recent changes in the dynamics of the world rice market have significantly
increased the volatility of rice prices which directly affects the Company's
costs and reported results of operations. The change in market dynamics is
expected to be more than temporary and the Company believes that the FIFO method
of accounting for its domestic rice inventories will more accurately reflect its
reported results of operations in this environment. The Company's selling prices
cannot be immediately adjusted to reflect inventory cost changes. Because rice
costs represent over 50% of the finished goods cost, substantial changes in
those costs significantly affect the annual results of operations, and under the
LIFO method, complicate the estimation process on an interim basis. There is no
effective way to hedge against the effects of cost fluctuations. The Company
operates in various foreign countries and is therefore subject to currency
fluctuations. Changes in the value of the United States dollar against these
currencies will affect the Company's results of operations and financial
position. When the United States dollar strengthens compared to other local
currencies, the operating results of the Company's foreign units translates into
fewer United States dollars, thus decreasing the revenues and expenses of the
Company on a consolidated basis. If the United States dollar weakens against the
other relevant currencies, the opposite occurs. The Company's foreign units
attempt to minimize the effects of currency risk by borrowing externally in the
local currency and by hedging their limited purchases made in foreign currencies
when that option is available. As a matter of policy, the Company does not
engage in currency speculation. Changes in exchange rates historically have not
materially impacted the Company's net sales, costs or business practices and
management expects this to continue. Inflationary conditions in the United
States and Europe have been moderate and have not had a material impact on the
results of operations or financial position for the three years ended June 30,
1996. Despite higher inflationary rates in Central America, inflation has not
had a material impact on the results of operations of the Company's units
located in that region because the Company has generally been able to pass on
cost increases to its customers. The Company includes in domestic operations all
export sales originating from the United States and sales in Puerto Rico.
FISCAL 1996 COMPARED TO FISCAL 1995
Sales in fiscal 1996 totaled $440.5 million, an increase of $13.3 million or
3.1% from fiscal 1995 sales which were $427.2 million. Domestic sales increased
a strong 5.4% or $12.9 million to $254.4 million in the current year from $241.5
million last year. A unit volume increase of 3.2% added $7.6 million to sales
and a combination of product mix and higher prices added an additional $5.3
million. Sales increases were recorded in all sectors of the domestic rice
business with the exception of the foodservice sector where strong competition
limited growth and volumes were essentially flat with last year. The retail
sector accounted for 74.4% of total domestic sales which was up from 73.7% last
year. Within this sector, sales of value-added instant rice and prepared rice
mixes increased unit volumes by 8.6% and sales by $8.7 million or 10.6%. Of the
$8.7 million increase in sales for these value-added products, increased volumes
accounted for $7.1 million of the increase and sales mix contributed an
additional $1.6 million. Sales to industrial customers increased $0.7 million or
5.4% on a 6.4% increase in hundredweight volumes. Sales in the export/commodity
area increased $2.9 million or 6.9% to $45.8 million. In Central America, sales
increased $1.1 million or 1.6% to $69.7 million from
RIVIANA FOODS INC.
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$68.6 million in the previous year. Volume gains added $1.4 million and
higher prices added an additional $7.6 million while unfavorable currency
translation reduced sales by $7.9 million. A difficult economic environment in
Guatemala as well as strong competition from lower cost goods smuggled in from
Mexico and local competitors combined to reduce sales of the Company's fruit
nectar and juice products. Unit case volumes were down 3.5% and dollar sales
were down 7.1%. Strong gains were recorded by the cookie and cracker business in
Central America. Unit tonnage volumes increased 7.9% and dollar volume increased
by 11.1%. New products were responsible for the majority of the sales increase.
In Europe, due to currency devaluation, sales declined by $0.8 million to $116.4
million in fiscal 1996 from $117.2 million in the prior year. Increased volumes,
principally in dried fruit and packaged meat products, added $2.4 million to
sales while a change in product mix reduced sales by $0.3 million and
unfavorable currency translation reduced sales an additional $2.9 million.
Gross profit increased $0.8 million or 0.6% to $123.6 million in fiscal
1996 from $122.8 million in the previous year. As a percentage of sales, gross
profit declined slightly to 28.1% from 28.8% last year. In the domestic rice
business gross profit increased by $1.9 million to $96.0 million from $94.1
million last year. The increase in gross profit was directly related to the
increase in sales volume. As a percentage of sales, gross profit in the domestic
business declined to 37.8% from 39.0%. The decline in gross profit as a
percentage of sales was due to increased rice costs. However, as noted below,
market conditions allowed for a reduction in promotional spending which more
than recovered the reduction in the gross profit percentage. The gross profit
for the Central American business decreased by $0.8 million to $18.8 million and
also declined as a percentage of sales to 27.0% from 28.5% in fiscal 1995. The
reduced gross profit for this segment was a result of the competitive market for
fruit nectar and juice products. In Europe, gross profit declined by $0.4
million as a result of increased costs associated with certain canned tomato
products.
Advertising, selling and warehousing expenses of $78.4 million were $2.7
million or 3.3% less than the $81.1 million recorded last year. As a percentage
of sales this expense was 17.8% in fiscal 1996 versus 19.0% in the prior year.
In the domestic business, these expenses were $3.4 million less than last year
and were 25.3% of sales compared to 28.0% last year. The reduced expenses were
primarily in marketing and promotional spending. In fiscal 1996 rice costs were
escalating over the prior year's costs which reduced the need for competitive
promotional spending. In Central America, selling and promotional spending
increased by $0.9 million. The increase was about evenly divided between the
cookie and cracker product lines where the increased spending was related to the
volume increase and the fruit nectar and juice business where the increased
spending was to counter competitive market conditions.
Administrative and general expenses decreased by $0.1 million to $19.3
million in fiscal 1996. These expenses declined as a result of improved cost
control and lower legal expenses. As a percentage of sales, this expense
category declined to 4.4% from 4.5% last year.
Income from operations increased $3.5 million or 15.7% to $25.8 million
from $22.3 million in the previous year. Domestic operating income increased
$5.7 million or 47.7% to $17.4 million. This increase resulted from the gross
profit increase and the reduction in advertising, selling and warehousing costs.
In Central America, income from operations declined by $1.8 million to $6.7
million from $8.5 million in fiscal 1995. This decline in operating income is
directly attributable to the significant operating difficulties encountered by
the fruit nectar and juice products as discussed above. Gross profit was reduced
because of lower volumes and additional funds were committed to promotional
campaigns to counter the competitive pressure. Operating income in Europe
declined by $0.4 million to $1.6 million. This decline was directly related to
the lower gross profit.
Other income increased by $0.8 million to $0.6 million from an expense of
$0.2 million in fiscal 1995. Gains from the sales of marketable securities
increased $0.2 million to $1.0 million in the latest period. Interest expense
decreased by $0.3 million. Interest expense was lower for the domestic
operations by $0.4 million and for the European operations by $0.2 million due
to lower working capital requirements. In Central America, interest expense was
higher than last year by $0.3 million. The increase in expense was related to
the unexpected decline in fruit nectar and juice sales and the resulting higher
level of working capital. Equity in the earnings of unconsolidated affiliates
increased by $0.2 million to $1.8 million.
While income tax expense increased $0.8 million to $7.8 million from $7.0
million last year, as a percentage of income before tax, taxes decreased to
29.4% from 31.4% last year. The lower rate is the result of two unusual events
in Central America. In Costa Rica, the Company received a favorable court
opinion regarding previously applied for tax credits which reduced tax expense.
Offsetting this favorable event, the government in Guatemala passed an
extraordinary tax in the final quarter of the year which increased tax expense.
Excluding these unusual items, the effective tax rate would have been 31.2%
RIVIANA FOODS INC.
14
<PAGE>
FISCAL 1995 COMPARED TO FISCAL 1994
Sales in fiscal 1995 totaled $427.2 million, an increase of $8.1 million or
1.9% from fiscal 1994 sales which were $419.1 million. Domestic sales of $241.5
million decreased $0.6 million or 0.3% from the prior year's total of $242.1
million. Lower volumes in the domestic rice business reduced sales by $2.3
million while increased prices added $1.7 million. In the retail and industrial
sectors, sales increased $12.2 million or 6.8%. Higher volumes accounted for
$8.1 million of the total $12.2 million increase and increased selling prices
added the remaining $4.1 million. Within the retail category, regular rice
products volume increased by $4.3 million and prepared rice mixes volumes
increased by $2.6 million. The increased volumes can be attributed to the
Company's continuing successful marketing programs and expanded regional
distribution of new products. Sales declines totaling $12.8 million were
realized in the regular rice foodservice ($3.9 million) and export/commodity
($8.9 million) sectors. Significant price competition in the foodservice area
reduced the opportunities to sell product at an acceptable return.
Commodity/export sales are opportunistic and are based on the availability of
rice and an acceptable price environment. In fiscal 1995, market conditions were
not favorable for profitable commodity/export sales. In Central America, sales
increased 12.1% or $7.4 million to $68.6 million from $61.2 million the prior
year. Volume gains added $5.6 million and higher prices added an additional $4.5
million while unfavorable currency translation reduced sales by $2.7 million.
Volumes in Guatemala were particularly strong in nectars, juices, cookies and
crackers. New products were responsible for the major part of the increase in
cookie and cracker volumes. In Europe, the Company's sales increased by $1.3
million or 1.1% to $117.2 million primarily as a result of favorable currency
translation. Favorable currency translation increased sales by $6.3 million
while lower volumes reduced sales by $2.9 million and lower prices reduced sales
a further $2.1 million. The volume declines and reduced pricing occurred for the
most part in the lower-margin private label products. Significant volume
improvements were recorded in the dried fruit ($1.8 million) and packaged meat
($1.1 million) product lines. A sluggish economy in the United Kingdom and
significant product cost pressure from the major retailers restrained volumes
and prices.
Gross profit increased $2.9 million or 2.5% to $122.8 million in fiscal
1995 compared to $119.9 million in the previous year. As a percentage of sales,
gross profit increased slightly to 28.8% in fiscal 1995 from 28.6% in fiscal
1994. Gross profit on domestic rice sales increased $1.6 million or 1.7% to
$94.2 million from $92.6 million in the prior year. As a percentage of sales,
gross profit in the domestic business increased to 39.0% from 38.3% in fiscal
1994. This increase was a result of lower rice costs and an increase in the
sales of higher margin value added products. Gross profit in Central America
increased $1.6 million or 9.2% to $19.5 million. However, as a percentage of
sales, gross profit declined to 28.5% from 29.2% in the prior year. A processing
problem at the Company's Guatemalan subsidiary resulted in a one-time pretax
inventory loss of $0.4 million which directly affected gross profit. If the
effects of this one-time event are excluded, gross profit in Central America
would have been $19.9 million which represents an increase over the prior year
of $2.0 million or 11.3%. In Europe, gross profit remained reasonably constant
at $9.1 million and 7.8% as a percentage of sales.
Advertising, selling and warehousing expenses increased $9.0 million or
12.5% to 19.0% of sales from $72.1 million in fiscal 1994. In the domestic rice
business, these expenses increased by $7.2 million or 11.9% to $67.6 million
primarily to support expanded distribution and to counteract consumer response
to higher prices spawned in fiscal 1994 when rice costs were higher. In Central
America advertising and selling expenses increased by $1.5 million to $8.7
million or 20.5%. As a percentage of sales, these costs increased to 12.7% from
11.8% in the previous fiscal year. The increase in the relative percentage of
these expenses was incurred to support new product introductions and new market
penetration. In Europe, these expenses increased by $0.3 million due to
competitive market conditions.
Administrative and general expenses decreased slightly by $0.3 million to
$19.4 million from $19.7 million the previous year. These expenses were
essentially constant in the domestic and Central American segments but declined
$0.3 million in the Company's European operations due to improved cost control.
As a result of the slight decline in expenses, as a percentage of sales, this
category of spending declined to 4.6% of sales from 4.7% in fiscal 1994.
Income from operations declined $5.8 million or 20.6% to $22.3 million from
$28.1 million in the previous year. Operating income declined $5.5 million in
the domestic business to $11.8 million in fiscal 1995 from $17.3 million in
fiscal 1994. The decline in income from operations resulted from the increase in
promotional spending ($7.2 million) more than offsetting the increase in gross
profit ($1.6 million). As a percentage of sales, income from operations for the
domestic business dropped to 4.9% from 7.1%. In Central America, income from
operations was about even with the prior year and in Europe operating income was
down slightly by $0.3 million as a result of the increase in marketing
expenditures previously noted.
Other expense increased by $0.2 million in fiscal 1995. Interest expense
decreased by $2.0 million in fiscal 1995 to $3.1 million from $5.1 million in
the previous year. Domestic interest expense was lower by $1.5 million as the
Company prepaid all of its domestic long-term debt in the fourth quarter of
fiscal 1994. In Central America, interest
RIVIANA FOODS INC.
15
<PAGE>
expense was lower by $0.3 million as the Company lowered dividend remittances in
order to reduce high interest rate local borrowings. Interest expense was
reduced by $0.2 million in Europe due to improved working capital management
which reduced borrowings. In fiscal 1994, the Company received litigation
settlements totaling $1.2 million, an insurance refund of $0.4 million and
reduced other employee benefit expenses by $0.5 million. These one-time expense
reductions were not repeated in fiscal 1995.
Income tax expense decreased to $7.0 million in fiscal 1995 from $10.4
million in the previous year. As a percentage of income before income taxes,
minority interest and extraordinary item, tax expense declined to 31.4% from
37.0% in the prior period. The decrease in the overall effective tax rate was
due to two main reasons. In Central America, the local effective tax rates were
reduced and the increase in earnings from this segment was taxed at rates below
the United States statutory rate. In addition, remittances from Central America
decreased and, accordingly, local withholding taxes on remittances were reduced
from the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The financial condition of the Company remained strong during fiscal 1996.
The Company requires liquidity and capital primarily to provide the working
capital and plant and equipment to support its operations and growth. The
Company's primary sources of liquidity are cash provided from operating
activities and external borrowing. A strong working capital position and
continued profitability are the key factors which allow the Company to generate
most of its capital requirements internally.
The Company's net debt position (short and long-term debt less cash and
marketable securities) at June 30, 1996, was $1.0 million. The ratio of debt to
total capitalization (total debt plus stockholders' equity) was 12.5% at the end
of fiscal 1996 and the current ratio was 2.2.
Consistent with historical results, operations provided a strong, positive
cash flow during fiscal 1996 which resulted in net cash provided from operations
of $13.4 million. This represented a decrease of $9.4 million from the prior
year. While net income of $18.3 million increased $3.4 million or 22.8%, net
working capital requirements increased by $13.3 million and funds from non-cash
depreciation and amortization charges decreased by $0.9 million. For the three
year period ended June 30, 1996, net cash provided by operations exceeded
capital expenditure requirements each year. Total capital expenditures for
fiscal 1996, fiscal 1995 and fiscal 1994 were $11.0 million, $9.3 million and
$10.6 million. The capital spending program in fiscal 1996 was focused on
expanding capacity of the domestic rice business and Central American
operations.
Dividends paid per share of common stock increased 38.7% to $0.35 in fiscal
1996.
In fiscal 1996, the board of directors of the Company authorized the
open-market repurchase of up to 500,000 shares of the Company's common stock.
The repurchased stock will be used for general corporate purposes including
issuance of stock under employee stock option plans. During 1996 the Company
spent $0.4 million to repurchase 28.0 thousand shares at an average price of
$13.10 per share. Of the 28.0 thousand shares repurchased, 12.2 thousand shares
were reissued upon exercise of employee stock options.
The Company has an aggregate of $45.0 million in domestic, short-term,
unsecured revolving credit facilities with two banks. Under the terms of these
facilities, the Company has the option of borrowing at the bank's prime rate or
at the Eurodollar rate plus 3/8%. At June 30, 1996, the Company had borrowed a
total of $7.3 million under these agreements at an average interest rate of
5.8%. One of these facilities will expire in fiscal 1997 and the Company expects
to renew the facility for another one-year period.
The Company's international operations are financed internally or through
borrowings in local currency without the benefit of parent Company guarantees,
with the exception of the Company's United Kingdom operations, for which the
Company provides a guarantee for an (pound)8.0 million revolving short-term
credit facility provided by a United States bank. This facility expires in
February 1997 and at June 30, 1996, no loans were outstanding under this
facility. The Company's foreign subsidiaries have a total of $28.0 million in
available short-term credit lines from local sources and at June 30, 1996, the
subsidiaries have borrowed a total of $3.5 million. The Company also provides
funds to its United Kingdom subsidiary through a (pound)1.5 million intercompany
loan and hedges its exposure to currency exchange rate fluctuations.
The Company holds a portfolio of marketable securities with a market value
of $8.2 million at June 30, 1996, which is available to provide additional
liquidity.
The Company believes that the combination of its working capital, unused
and available short-term credit lines and cash flow from operations will provide
it with sufficient capital resources and liquidity to meet its foreseeable
needs.
RIVIANA FOODS INC.
16
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
June 30, 1996 July 2, 1995
--------- ---------
ASSETS
CURRENT ASSETS:
Cash ........................................... $ 7,086 $ 5,029
Cash equivalents ............................... 304 113
Marketable securities .......................... 8,244 10,029
Accounts receivable, less allowance for
doubtful accounts of $419 and $503 ............ 42,109 40,093
Inventories .................................... 52,884 49,970
Prepaid expenses ............................... 1,987 1,609
--------- ---------
Total current assets ................. 112,614 106,843
PROPERTY, PLANT AND EQUIPMENT:
Land ........................................... 3,466 3,438
Buildings ...................................... 20,334 17,852
Machinery and equipment ........................ 62,468 56,246
--------- ---------
Property, plant and equipment - gross ..... 86,268 77,536
Less - Accumulated depreciation ................ (33,921) (29,999)
--------- ---------
Property, plant and equipment - net ....... 52,347 47,537
DUE FROM AFFILIATES ................................. 55 1,106
INVESTMENTS IN UNCONSOLIDATED AFFILIATES ............ 12,176 15,280
OTHER ASSETS ........................................ 5,312 4,917
--------- ---------
Total assets ......................... $ 182,504 $ 175,683
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ................................ $ 10,770 $ 11,519
Current maturities of long-term debt ........... 2,261 1,757
Accounts payable ............................... 22,204 25,716
Accrued liabilities ............................ 12,418 13,640
Income taxes payable ........................... 3,968 6,709
--------- ---------
Total current liabilities ............ 51,621 59,341
LONG-TERM DEBT, net of current maturities ........... 3,644 2,372
DEFERRED INCOME TAXES ............................... 6,348 3,047
OTHER NONCURRENT LIABILITIES ........................ 2,970 3,630
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS .................................. 1,415 498
STOCKHOLDERS' EQUITY:
Preferred stock, $1 per share par, 5,000
shares authorized, none issued
Common stock, $1 per share par, 24,000
shares authorized, 15,883 issued .............. 15,883 15,883
Paid-in capital ................................ 6,067 6,060
Retained earnings .............................. 96,036 83,314
Unrealized gains on marketable securities,
net of taxes .................................. 2,364 2,040
Cumulative foreign currency translation
adjustment .................................... (3,636) (502)
Treasury stock, at cost, 16 shares ............. (208) --
--------- ---------
Total stockholders' equity ........... 116,506 106,795
--------- ---------
Total liabilities and stockholders'
equity .............................. $ 182,504 $ 175,683
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC.
17
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Years Ended
---------------------------------
June 30, July 2, July 3,
1996 1995 1994
--------- --------- ---------
NET SALES .................................. $ 440,492 $ 427,229 $ 419,143
COST OF SALES .............................. 316,913 304,381 299,286
--------- --------- ---------
Gross profit .......................... 123,579 122,848 119,857
--------- --------- ---------
COSTS AND EXPENSES:
Advertising, selling and warehousing .. 78,445 81,102 72,073
Administrative and general ............ 19,311 19,429 19,680
--------- --------- ---------
Total costs and expenses ......... 97,756 100,531 91,753
--------- --------- ---------
Income from operations ........... 25,823 22,317 28,104
OTHER INCOME (EXPENSE):
Gain on sales of marketable securities 977 753 607
Interest income ....................... 465 403 491
Interest expense ...................... (2,814) (3,089) (5,080)
Equity in earnings of
unconsolidated affiliates ........... 1,819 1,665 1,745
Other income .......................... 176 99 2,222
--------- --------- ---------
Total other income (expense) ..... 623 (169) (15)
--------- --------- ---------
Income before income taxes,
minority interest and
extraordinary item .......... 26,446 22,148 28,089
INCOME TAX EXPENSE ......................... 7,770 6,963 10,401
MINORITY INTEREST IN EARNINGS OF
CONSOLIDATED SUBSIDIARY ............... 334 254 208
--------- --------- ---------
Income before extraordinary item ...... 18,342 14,931 17,480
EXTRAORDINARY ITEM - Penalty for early
payment of long-term debt, net of taxes -- -- (1,037)
Net income ............................ $ 18,342 $ 14,931 $ 16,443
========= ========= =========
EARNINGS PER SHARE:
Income before extraordinary item ...... $ 1.16 $ 0.96 $ 1.14
Extraordinary item .................... (0.07)
Net income ............................ $ 1.16 $ 0.96 $ 1.07
========= ========= =========
Weighted average common
shares outstanding ............... 15,873 15,534 15,340
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
June 30, 1996 July 2, 1995
--------- ---------
ASSETS
CURRENT ASSETS:
Cash ........................................... $ 7,086 $ 5,029
Cash equivalents ............................... 304 113
Marketable securities .......................... 8,244 10,029
Accounts receivable, less allowance for
doubtful accounts of $419 and $503 ............ 42,109 40,093
Inventories .................................... 52,884 49,970
Prepaid expenses ............................... 1,987 1,609
--------- ---------
Total current assets ................. 112,614 106,843
PROPERTY, PLANT AND EQUIPMENT:
Land ........................................... 3,466 3,438
Buildings ...................................... 20,334 17,852
Machinery and equipment ........................ 62,468 56,246
--------- ---------
Property, plant and equipment - gross ..... 86,268 77,536
Less - Accumulated depreciation ................ (33,921) (29,999)
--------- ---------
Property, plant and equipment - net ....... 52,347 47,537
DUE FROM AFFILIATES ................................. 55 1,106
INVESTMENTS IN UNCONSOLIDATED AFFILIATES ............ 12,176 15,280
OTHER ASSETS ........................................ 5,312 4,917
--------- ---------
Total assets ......................... $ 182,504 $ 175,683
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ................................ $ 10,770 $ 11,519
Current maturities of long-term debt ........... 2,261 1,757
Accounts payable ............................... 22,204 25,716
Accrued liabilities ............................ 12,418 13,640
Income taxes payable ........................... 3,968 6,709
--------- ---------
Total current liabilities ............ 51,621 59,341
LONG-TERM DEBT, net of current maturities ........... 3,644 2,372
DEFERRED INCOME TAXES ............................... 6,348 3,047
OTHER NONCURRENT LIABILITIES ........................ 2,970 3,630
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS .................................. 1,415 498
STOCKHOLDERS' EQUITY:
Preferred stock, $1 per share par, 5,000
shares authorized, none issued
Common stock, $1 per share par, 24,000
shares authorized, 15,883 issued .............. 15,883 15,883
Paid-in capital ................................ 6,067 6,060
Retained earnings .............................. 96,036 83,314
Unrealized gains on marketable securities,
net of taxes .................................. 2,364 2,040
Cumulative foreign currency translation
adjustment .................................... (3,636) (502)
Treasury stock, at cost, 16 shares ............. (208) --
--------- ---------
Total stockholders' equity ........... 116,506 106,795
--------- ---------
Total liabilities and stockholders'
equity .............................. $ 182,504 $ 175,683
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC.
18
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL ACCOUNTS AND RETAINED EARNINGS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Common Stock Paid-In Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount Total
------- -------- ------- -------- --- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, June 27, 1993 ................. 15,313 $ 15,313 $ 863 $ 60,203 -- -- $ 76,379
Net income ........................ -- -- -- 16,443 -- -- 16,443
Sales of common stock ............. 73 73 167 -- -- -- 240
Dividends paid ($.200 per share) .. -- -- -- (3,067) -- -- (3,067)
Repurchases of common stock ....... (8) (8) (9) (14) -- -- (31)
------- -------- ------- -------- --- ----- ---------
BALANCE, July 3, 1994 .................. 15,378 15,378 1,021 73,565 -- -- 89,964
Net income ........................ -- -- -- 14,931 -- -- 14,931
Sales of common stock,
net of initial public offering
expenses of $1,040 ........... 511 511 4,103 -- -- -- 4,614
Dividends declared
($.3333 per share) ........... -- -- -- (5,167) -- -- (5,167)
Repurchase of common stock ........ (6) (6) (5) (15) -- -- (26)
Collection of employee
discount on stock ............ -- -- 941 -- -- -- 941
------- -------- ------- -------- --- ----- ---------
BALANCE, July 2, 1995 .................. 15,883 15,883 6,060 83,314 -- -- 105,257
Net income ........................ -- -- -- 18,342 -- -- 18,342
Sales of common stock ............. -- -- -- (12) 12 $ 158 146
Dividends declared
($.3533 per share) ........... -- -- -- (5,608) -- -- (5,608)
Repurchases of common stock ....... -- -- 7 -- (28) (366) (359)
------- -------- ------- -------- --- ----- ---------
BALANCE, June 30, 1996 ................. 15,883 $ 15,883 $ 6,067 $ 96,036 (16) $(208) $ 117,778
======= ======== ======= ======== === ===== =========
</TABLE>
CONSOLIDATED STATEMENTS OF OTHER EQUITY ACCOUNTS
(In Thousands)
Unrealized Cumulative
Gains Foreign
On Marketable Currency
Securities, Translation
Net of Taxes Adjustment
------------ ----------
BALANCE, June 27, 1993 ............................. -- $ (1,930)
Unrealized gains on marketable securities,
net of taxes ............................. $ 2,125 --
Effect of balance sheet translations .......... -- 495
------------ ----------
BALANCE, July 3, 1994 .............................. 2,125 (1,435)
Marketable securities, net of taxes:
Realized (gains) ......................... (490) --
Unrealized gains ......................... 405 --
Effect of balance sheet translations .......... -- 933
------------ ----------
BALANCE, July 2, 1995 .............................. 2,040 (502)
Marketable securities, net of taxes:
Realized (gains) ......................... (634) --
Unrealized gains ......................... 958 --
Effect of balance sheet translations .......... -- (3,134)
------------ ----------
BALANCE, June 30, 1996 ............................. $ 2,364 $ (3,636)
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Years Ended
---------------------------------
June 30, July 2, July 3,
1996 1995 1994
--------- --------- ---------
NET SALES .................................. $ 440,492 $ 427,229 $ 419,143
COST OF SALES .............................. 316,913 304,381 299,286
--------- --------- ---------
Gross profit .......................... 123,579 122,848 119,857
--------- --------- ---------
COSTS AND EXPENSES:
Advertising, selling and warehousing .. 78,445 81,102 72,073
Administrative and general ............ 19,311 19,429 19,680
--------- --------- ---------
Total costs and expenses ......... 97,756 100,531 91,753
--------- --------- ---------
Income from operations ........... 25,823 22,317 28,104
OTHER INCOME (EXPENSE):
Gain on sales of marketable securities 977 753 607
Interest income ....................... 465 403 491
Interest expense ...................... (2,814) (3,089) (5,080)
Equity in earnings of
unconsolidated affiliates ........... 1,819 1,665 1,745
Other income .......................... 176 99 2,222
--------- --------- ---------
Total other income (expense) ..... 623 (169) (15)
--------- --------- ---------
Income before income taxes,
minority interest and
extraordinary item .......... 26,446 22,148 28,089
INCOME TAX EXPENSE ......................... 7,770 6,963 10,401
MINORITY INTEREST IN EARNINGS OF
CONSOLIDATED SUBSIDIARY ............... 334 254 208
--------- --------- ---------
Income before extraordinary item ...... 18,342 14,931 17,480
EXTRAORDINARY ITEM - Penalty for early
payment of long-term debt, net of taxes -- -- (1,037)
Net income ............................ $ 18,342 $ 14,931 $ 16,443
========= ========= =========
EARNINGS PER SHARE:
Income before extraordinary item ...... $ 1.16 $ 0.96 $ 1.14
Extraordinary item .................... (0.07)
Net income ............................ $ 1.16 $ 0.96 $ 1.07
========= ========= =========
Weighted average common
shares outstanding ............... 15,873 15,534 15,340
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
June 30, 1996 July 2, 1995
--------- ---------
ASSETS
CURRENT ASSETS:
Cash ........................................... $ 7,086 $ 5,029
Cash equivalents ............................... 304 113
Marketable securities .......................... 8,244 10,029
Accounts receivable, less allowance for
doubtful accounts of $419 and $503 ............ 42,109 40,093
Inventories .................................... 52,884 49,970
Prepaid expenses ............................... 1,987 1,609
--------- ---------
Total current assets ................. 112,614 106,843
PROPERTY, PLANT AND EQUIPMENT:
Land ........................................... 3,466 3,438
Buildings ...................................... 20,334 17,852
Machinery and equipment ........................ 62,468 56,246
--------- ---------
Property, plant and equipment - gross ..... 86,268 77,536
Less - Accumulated depreciation ................ (33,921) (29,999)
--------- ---------
Property, plant and equipment - net ....... 52,347 47,537
DUE FROM AFFILIATES ................................. 55 1,106
INVESTMENTS IN UNCONSOLIDATED AFFILIATES ............ 12,176 15,280
OTHER ASSETS ........................................ 5,312 4,917
--------- ---------
Total assets ......................... $ 182,504 $ 175,683
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ................................ $ 10,770 $ 11,519
Current maturities of long-term debt ........... 2,261 1,757
Accounts payable ............................... 22,204 25,716
Accrued liabilities ............................ 12,418 13,640
Income taxes payable ........................... 3,968 6,709
--------- ---------
Total current liabilities ............ 51,621 59,341
LONG-TERM DEBT, net of current maturities ........... 3,644 2,372
DEFERRED INCOME TAXES ............................... 6,348 3,047
OTHER NONCURRENT LIABILITIES ........................ 2,970 3,630
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS .................................. 1,415 498
STOCKHOLDERS' EQUITY:
Preferred stock, $1 per share par, 5,000
shares authorized, none issued
Common stock, $1 per share par, 24,000
shares authorized, 15,883 issued .............. 15,883 15,883
Paid-in capital ................................ 6,067 6,060
Retained earnings .............................. 96,036 83,314
Unrealized gains on marketable securities,
net of taxes .................................. 2,364 2,040
Cumulative foreign currency translation
adjustment .................................... (3,636) (502)
Treasury stock, at cost, 16 shares ............. (208) --
--------- ---------
Total stockholders' equity ........... 116,506 106,795
--------- ---------
Total liabilities and stockholders'
equity .............................. $ 182,504 $ 175,683
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC.
19
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Years Ended
------------------------------------------
June 30, July 2, July 3,
1996 1995 1994
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income ................................................................. $ 18,342 $ 14,931 $ 16,443
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .................................... 4,328 5,190 3,622
Deferred income taxes ............................................ 551 (357) (49)
Gain on disposition of assets .................................... (1,068) (911) (496)
Equity in earnings of unconsolidated affiliates .................. (1,819) (1,665) (1,745)
Change in assets and liabilities:
Accounts receivable, net .................................... (3,012) 1,391 (5,060)
Inventories ................................................. (4,167) 2,185 (4,060)
Prepaid expenses ............................................ (415) (439) (204)
Other assets ................................................ 3,452 827 1,594
Accounts payable and accrued liabilities .................... (3,898) 4,059 2,721
Income taxes payable ........................................ (33) (2,827) 3,831
Other noncurrent liabilities ................................ 172 263 132
Minority interest ........................................... 998 166 124
-------- -------- --------
Net cash provided by operating activities .............. 13,431 22,813 16,853
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ................................. (11,041) (9,275) (10,635)
Proceeds from disposals of property, plant and equipment ................... 432 243 309
Proceeds from sales of marketable securities ............................... 3,594 1,056 8,303
Collection of notes receivable ............................................. 14 59 113
Due from (to) affiliates ................................................... 593 (1,489) 557
Cash paid for unconsolidated affiliates .................................... (142)
Increase in marketable securities .......................................... (335) (228) (5,037)
-------- -------- --------
Net cash used in investing activities .................. (6,743) (9,634) (6,532)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term debt ..................................... (560) (18,266) 14,694
Additions to long-term debt ................................................ 5,835 2,238 2,064
Repayments of long-term debt ............................................... (3,753) (2,368) (27,462)
Dividends paid ............................................................. (5,504) (3,844) (3,067)
Repurchases of common stock ................................................ (359) (26) (31)
Sales of common stock, net of initial public offering
expenses in 1995 ...................................................... 146 4,614 240
Collection of employee discount on stock ................................... 941
-------- -------- --------
Net cash used in financing activities .................. (4,195) (16,711) (13,562)
-------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS ........................................................... (245) (18) 24
-------- -------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ........................................................... 2,248 (3,550) (3,217)
CASH AND CASH EQUIVALENTS, beginning of period .................................. 5,142 8,692 11,909
-------- -------- --------
CASH AND CASH EQUIVALENTS, end of period ........................................ $ 7,390 $ 5,142 $ 8,692
======== ======== ========
CASH PAID DURING THE PERIOD FOR:
Interest ................................................................... $ 2,862 $ 3,063 $ 5,799
Income taxes ............................................................... 7,807 10,356 5,863
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL ACCOUNTS AND RETAINED EARNINGS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Common Stock Paid-In Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount Total
------- -------- ------- -------- --- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, June 27, 1993 ................. 15,313 $ 15,313 $ 863 $ 60,203 -- -- $ 76,379
Net income ........................ -- -- -- 16,443 -- -- 16,443
Sales of common stock ............. 73 73 167 -- -- -- 240
Dividends paid ($.200 per share) .. -- -- -- (3,067) -- -- (3,067)
Repurchases of common stock ....... (8) (8) (9) (14) -- -- (31)
------- -------- ------- -------- --- ----- ---------
BALANCE, July 3, 1994 .................. 15,378 15,378 1,021 73,565 -- -- 89,964
Net income ........................ -- -- -- 14,931 -- -- 14,931
Sales of common stock,
net of initial public offering
expenses of $1,040 ........... 511 511 4,103 -- -- -- 4,614
Dividends declared
($.3333 per share) ........... -- -- -- (5,167) -- -- (5,167)
Repurchase of common stock ........ (6) (6) (5) (15) -- -- (26)
Collection of employee
discount on stock ............ -- -- 941 -- -- -- 941
------- -------- ------- -------- --- ----- ---------
BALANCE, July 2, 1995 .................. 15,883 15,883 6,060 83,314 -- -- 105,257
Net income ........................ -- -- -- 18,342 -- -- 18,342
Sales of common stock ............. -- -- -- (12) 12 $ 158 146
Dividends declared
($.3533 per share) ........... -- -- -- (5,608) -- -- (5,608)
Repurchases of common stock ....... -- -- 7 -- (28) (366) (359)
------- -------- ------- -------- --- ----- ---------
BALANCE, June 30, 1996 ................. 15,883 $ 15,883 $ 6,067 $ 96,036 (16) $(208) $ 117,778
======= ======== ======= ======== === ===== =========
</TABLE>
CONSOLIDATED STATEMENTS OF OTHER EQUITY ACCOUNTS
(In Thousands)
Unrealized Cumulative
Gains Foreign
On Marketable Currency
Securities, Translation
Net of Taxes Adjustment
------------ ----------
BALANCE, June 27, 1993 ............................. -- $ (1,930)
Unrealized gains on marketable securities,
net of taxes ............................. $ 2,125 --
Effect of balance sheet translations .......... -- 495
------------ ----------
BALANCE, July 3, 1994 .............................. 2,125 (1,435)
Marketable securities, net of taxes:
Realized (gains) ......................... (490) --
Unrealized gains ......................... 405 --
Effect of balance sheet translations .......... -- 933
------------ ----------
BALANCE, July 2, 1995 .............................. 2,040 (502)
Marketable securities, net of taxes:
Realized (gains) ......................... (634) --
Unrealized gains ......................... 958 --
Effect of balance sheet translations .......... -- (3,134)
------------ ----------
BALANCE, June 30, 1996 ............................. $ 2,364 $ (3,636)
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Years Ended
---------------------------------
June 30, July 2, July 3,
1996 1995 1994
--------- --------- ---------
NET SALES .................................. $ 440,492 $ 427,229 $ 419,143
COST OF SALES .............................. 316,913 304,381 299,286
--------- --------- ---------
Gross profit .......................... 123,579 122,848 119,857
--------- --------- ---------
COSTS AND EXPENSES:
Advertising, selling and warehousing .. 78,445 81,102 72,073
Administrative and general ............ 19,311 19,429 19,680
--------- --------- ---------
Total costs and expenses ......... 97,756 100,531 91,753
--------- --------- ---------
Income from operations ........... 25,823 22,317 28,104
OTHER INCOME (EXPENSE):
Gain on sales of marketable securities 977 753 607
Interest income ....................... 465 403 491
Interest expense ...................... (2,814) (3,089) (5,080)
Equity in earnings of
unconsolidated affiliates ........... 1,819 1,665 1,745
Other income .......................... 176 99 2,222
--------- --------- ---------
Total other income (expense) ..... 623 (169) (15)
--------- --------- ---------
Income before income taxes,
minority interest and
extraordinary item .......... 26,446 22,148 28,089
INCOME TAX EXPENSE ......................... 7,770 6,963 10,401
MINORITY INTEREST IN EARNINGS OF
CONSOLIDATED SUBSIDIARY ............... 334 254 208
--------- --------- ---------
Income before extraordinary item ...... 18,342 14,931 17,480
EXTRAORDINARY ITEM - Penalty for early
payment of long-term debt, net of taxes -- -- (1,037)
Net income ............................ $ 18,342 $ 14,931 $ 16,443
========= ========= =========
EARNINGS PER SHARE:
Income before extraordinary item ...... $ 1.16 $ 0.96 $ 1.14
Extraordinary item .................... (0.07)
Net income ............................ $ 1.16 $ 0.96 $ 1.07
========= ========= =========
Weighted average common
shares outstanding ............... 15,873 15,534 15,340
========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
June 30, 1996 July 2, 1995
--------- ---------
ASSETS
CURRENT ASSETS:
Cash ........................................... $ 7,086 $ 5,029
Cash equivalents ............................... 304 113
Marketable securities .......................... 8,244 10,029
Accounts receivable, less allowance for
doubtful accounts of $419 and $503 ............ 42,109 40,093
Inventories .................................... 52,884 49,970
Prepaid expenses ............................... 1,987 1,609
--------- ---------
Total current assets ................. 112,614 106,843
PROPERTY, PLANT AND EQUIPMENT:
Land ........................................... 3,466 3,438
Buildings ...................................... 20,334 17,852
Machinery and equipment ........................ 62,468 56,246
--------- ---------
Property, plant and equipment - gross ..... 86,268 77,536
Less - Accumulated depreciation ................ (33,921) (29,999)
--------- ---------
Property, plant and equipment - net ....... 52,347 47,537
DUE FROM AFFILIATES ................................. 55 1,106
INVESTMENTS IN UNCONSOLIDATED AFFILIATES ............ 12,176 15,280
OTHER ASSETS ........................................ 5,312 4,917
--------- ---------
Total assets ......................... $ 182,504 $ 175,683
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ................................ $ 10,770 $ 11,519
Current maturities of long-term debt ........... 2,261 1,757
Accounts payable ............................... 22,204 25,716
Accrued liabilities ............................ 12,418 13,640
Income taxes payable ........................... 3,968 6,709
--------- ---------
Total current liabilities ............ 51,621 59,341
LONG-TERM DEBT, net of current maturities ........... 3,644 2,372
DEFERRED INCOME TAXES ............................... 6,348 3,047
OTHER NONCURRENT LIABILITIES ........................ 2,970 3,630
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS .................................. 1,415 498
STOCKHOLDERS' EQUITY:
Preferred stock, $1 per share par, 5,000
shares authorized, none issued
Common stock, $1 per share par, 24,000
shares authorized, 15,883 issued .............. 15,883 15,883
Paid-in capital ................................ 6,067 6,060
Retained earnings .............................. 96,036 83,314
Unrealized gains on marketable securities,
net of taxes .................................. 2,364 2,040
Cumulative foreign currency translation
adjustment .................................... (3,636) (502)
Treasury stock, at cost, 16 shares ............. (208) --
--------- ---------
Total stockholders' equity ........... 116,506 106,795
--------- ---------
Total liabilities and stockholders'
equity .............................. $ 182,504 $ 175,683
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
RIVIANA FOODS INC.
20
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996, JULY 2, 1995, AND JULY 3, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) ORGANIZATION AND NATURE OF BUSINESS:
Riviana Foods Inc. ("Riviana") and subsidiaries (collectively "Company")
are primarily engaged in the processing, marketing and distributing of rice and
other food products. The Company has rice operations in the United States and in
Belgium, through Boost Distribution C.V. ("Boost") and Herto N.V. ("Herto"),
unconsolidated affiliates, food operations in Guatemala and Costa Rica,
Alimentos Kern de Guatemala, S.A., ("Kern") and Pozuelo, S.A., ("Pozuelo") and a
food distribution operation in the United Kingdom, Stevens & Brotherton Ltd.
("S&B").
In the United States, the Company processes, markets and distributes
branded and private-label rice products to the retail grocery trade and food
service industry, bulk rice and rice by-products to industrial customers and
branded and value-added rice products to Puerto Rico and other international
markets. Riviana's primary brand names are Success(R), Mahatma(R), Carolina(R),
River(R), WaterMaid(R), Sello Rojo(R) and El Mago(R).
Through Boost and Herto, the Company processes and sells packaged rice
products under the Bosto(R) brand within Belgium, private-label packaged rice
products to major retailers in the European Union and both bulk and branded rice
products to Eastern Europe and elsewhere.
In Central America, Kern produces and markets a wide range of processed
fruits and vegetables under the Kern's(R), Ducal(R) and Fun-C(R) brands. Pozuelo
produces and markets cookies and crackers under the Pozuelo(R) brand. Both
Kern's and Pozuelo's products are sold primarily in Central America with some
products under the Ducal(R) and Pozuelo(R) brands exported to selected United
States markets.
S&B distributes recognized brand name and private-label rice and other food
products in the United Kingdom to retail, wholesale, food service and industrial
customers.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
FISCAL REPORTING PERIODS
The Company operates on a 52/53 week fiscal year ending on the Sunday
closest to June 30. This period is utilized as it is a natural business year
closely coinciding with the rice crop year in the southern United States, rice
being the largest component of the Company's sales. All fiscal years presented
are 52-week fiscal years except the fiscal year ended July 3, 1994, which has 53
weeks.
CONSOLIDATION
The consolidated financial statements include the accounts of Riviana and
its majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
The Company has equity investments in certain food processing, marketing
and distribution companies, which are accounted for utilizing the equity method
of accounting. Ownership interests range from 33 to 50 percent in these
unconsolidated affiliates. The following represents summarized financial
information with respect to the assets, liabilities and results of operations of
the unconsolidated affiliates.
RIVIANA FOODS
21
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996, JULY 2, 1995, AND JULY 3, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) ORGANIZATION AND NATURE OF BUSINESS:
Riviana Foods Inc. ("Riviana") and subsidiaries (collectively "Company")
are primarily engaged in the processing, marketing and distributing of rice and
other food products. The Company has rice operations in the United States and in
Belgium, through Boost Distribution C.V. ("Boost") and Herto N.V. ("Herto"),
unconsolidated affiliates, food operations in Guatemala and Costa Rica,
Alimentos Kern de Guatemala, S.A., ("Kern") and Pozuelo, S.A., ("Pozuelo") and a
food distribution operation in the United Kingdom, Stevens & Brotherton Ltd.
("S&B").
In the United States, the Company processes, markets and distributes
branded and private-label rice products to the retail grocery trade and food
service industry, bulk rice and rice by-products to industrial customers and
branded and value-added rice products to Puerto Rico and other international
markets. Riviana's primary brand names are Success(R), Mahatma(R), Carolina(R),
River(R), WaterMaid(R), Sello Rojo(R) and El Mago(R).
Through Boost and Herto, the Company processes and sells packaged rice
products under the Bosto(R) brand within Belgium, private-label packaged rice
products to major retailers in the European Union and both bulk and branded rice
products to Eastern Europe and elsewhere.
In Central America, Kern produces and markets a wide range of processed
fruits and vegetables under the Kern's(R), Ducal(R) and Fun-C(R) brands. Pozuelo
produces and markets cookies and crackers under the Pozuelo(R) brand. Both
Kern's and Pozuelo's products are sold primarily in Central America with some
products under the Ducal(R) and Pozuelo(R) brands exported to selected United
States markets.
S&B distributes recognized brand name and private-label rice and other food
products in the United Kingdom to retail, wholesale, food service and industrial
customers.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
FISCAL REPORTING PERIODS
The Company operates on a 52/53 week fiscal year ending on the Sunday
closest to June 30. This period is utilized as it is a natural business year
closely coinciding with the rice crop year in the southern United States, rice
being the largest component of the Company's sales. All fiscal years presented
are 52-week fiscal years except the fiscal year ended July 3, 1994, which has 53
weeks.
CONSOLIDATION
The consolidated financial statements include the accounts of Riviana and
its majority-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
The Company has equity investments in certain food processing, marketing
and distribution companies, which are accounted for utilizing the equity method
of accounting. Ownership interests range from 33 to 50 percent in these
unconsolidated affiliates. The following represents summarized financial
information with respect to the assets, liabilities and results of operations of
the unconsolidated affiliates.
RIVIANA FOODS
21
<PAGE>
Balance Sheet Data June 30, 1996 July 2, 1995
- --------------------------------------------------------------------------------
Current assets .................................... $33,685 $30,921#
Noncurrent assets ................................. 16,965 19,041
------- -------
Total assets ............................ $50,650 $49,962
======= =======
Current liabilities ............................... $21,728 $14,992
Noncurrent liabilities ............................ 4,807 4,308
Common equity:
Riviana ...................................... 11,400 14,491#
Other ........................................ 12,715 16,171
------- -------
Total liabilities and equity ............ $50,650 $49,962
======= =======
Income Statement Data 1996 1995 1994
- --------------------------------------------------------------------------------
Net sales ......................................... $129,620 $112,488 $91,884
Gross profit ...................................... 16,467 16,405 13,422
Income before income taxes ........................ 5,845 4,742 4,817
Net income ........................................ 3,846 3,444 3,656
Equity in earnings of #unconsolidated affiliates .. 1,819 1,665 1,745
CHANGES IN ACCOUNTING PRINCIPLES
Effective June 28, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", SFAS No. 109, "Accounting for Income Taxes", and
SFAS No. 112, "Employers' Accounting for Postemployment Benefits". Effective
July 3, 1994, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". The effect of adopting these
statements had no material impact on the results of operations. The initial
effect of adopting SFAS No. 115 was recorded as an increase in stockholders'
equity of $2,125, net of taxes.
RECENTLY ISSUED ACCOUNTING STANDARDS
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", was issued in March 1995. The Company will
adopt SFAS No. 121 in the first quarter of 1997 and, based on current
circumstances, does not believe that such adoption will have a material effect
on its financial position or results of operations. SFAS No. 123, "Accounting
for Stock-Based Compensation", was issued in October 1995. As allowed by SFAS
No. 123, the Company will elect to continue to account for stock option grants
in accordance with Accounting Principles Board ("APB") Opinion No. 25, and,
accordingly, will recognize no compensation expense for stock options granted,
as all option plans require that the exercise price be equal to fair value at
the date of grant.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent gains and losses at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
#CASH AND CASH EQUIVALENTS
For purposes of the consolidated balance sheets and the consolidated
statements of cash flows, the Company considers all investments with original
maturities of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
In the normal course of business, the Company extends credit to its
customers. The Company regularly reviews the accounts and makes adequate
provision for any potentially uncollectible balances. At June 30, 1996,
management believes that the Company has no significant concentrations of credit
risk and has incurred no impairments in the carrying values of its accounts
receivable, other than that for which provision has been made.
RIVIANA FOODS
22
<PAGE>
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined
on the first-in, first-out ("FIFO") method. Inventories were composed of the
following:
June 30, 1996 July 2, 1995
------- -------
Raw materials .............................. $10,697 $10,448
Work in process ............................ 34 33
Finished goods ............................. 34,959 30,746
Packaging supplies ......................... 7,194 8,743
------- -------
Total ................................. $52,884 $49,970
======= =======
PROPERTY, PLANT AND EQUIPMENT
Land, buildings, machinery and equipment are stated at cost. Depreciation
is provided for financial reporting purposes on the straight-line basis over the
following estimated useful lives:
Buildings ............................ 30 to 40 years
Machinery and equipment .............. 3 to 15 years
Maintenance, repairs and minor replacements are charged against income as
incurred; major replacements and betterments are capitalized. The cost of assets
sold or retired and the related accumulated depreciation is removed from the
accounts at the time of disposition, and any resulting gain or loss is reflected
as other income or expense for the period.
OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities are composed primarily of certain
postretirement benefits and staff termination indemnities.
REVENUE RECOGNITION
Sales are recognized when products are shipped.
ADVERTISING
The costs of advertising, promotion and marketing programs are charged to
operations in the period incurred.
TRANSLATION OF FOREIGN CURRENCIES
The assets and liabilities of consolidated foreign subsidiaries are
translated into United States dollars at exchange rates in effect at the date of
the financial statements. Revenues and expenses are translated at the average
rates during the reporting periods. Resulting translation gains and losses are
accumulated as a separate component of stockholders' equity. Because the Company
follows the policy of not providing taxes on unremitted foreign earnings as
discussed in Note 7, such translation gains and losses are not tax effected.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist primarily of cash, cash
equivalents, trade receivables, trade payables, debt instruments and foreign
exchange instruments. The book values of these instruments are considered to be
representative of their respective fair values.
FOREIGN EXCHANGE INSTRUMENTS
The Company hedges certain product commitments using forward exchange
contracts. Gains and losses on these positions are deferred and included in the
basis of the product received. As a matter of policy, the Company does not hedge
to protect the translated results of foreign operations or other economic
exposures for which speculative accounting treatment of the hedging instruments
would be required, nor does it engage in currency speculation. The forward
exchange contracts have varying maturities with none exceeding twelve months.
The Company makes net settlements for foreign exchange contracts at maturity,
based on rates agreed to at inception of the contracts. At June 30, 1996, the
Company had established bank lines to purchase forward exchange contracts up to
$43,494, of which $20,715 was outstanding. Gains and losses deferred in
outstanding contracts at year end were immaterial.
RIVIANA FOODS
23
<PAGE>
RESTATEMENT - CHANGE IN METHOD OF ACCOUNTING FOR DOMESTIC RICE INVENTORIES
As of July 3, 1995, the Company changed its accounting method for domestic
rice inventories from the last-in, first-out ("LIFO") method to the FIFO method.
Recent changes in the dynamics of the world rice market have significantly
increased the volatility of rice prices which directly affects the Company's
costs and reported results of operations. This change in market dynamics is
expected to be more than temporary and the Company believes that the FIFO method
of accounting for its domestic rice inventories will more accurately reflect its
reported results of operations in this environment. The Company's selling prices
cannot be immediately adjusted to reflect inventory cost changes. Because rice
costs represent over 50% of the finished goods cost, substantial changes in
those costs significantly affect the annual results of operations and, under the
LIFO method, complicate the estimation process on an interim basis. There is no
effective way to hedge the effects of cost fluctuations. Based on these factors,
the Company believes this change in accounting method will more clearly reflect
its results of operations and financial position. The change has been applied
retroactively by restating the consolidated financial statements for prior
years. The effect of this restatement was to increase inventories and retained
earnings as of July 2, 1995, by $7,376 and $4,440. The following summarizes the
impact of this accounting change on income and earnings per share:
<TABLE>
<CAPTION>
1995 1994
---------- -------------------------
Income
Before
Extraordinary
Net Income Item Net Income
---------- ---------- ----------
<S> <C> <C> <C>
As previously reported .......................................... $ 19,125 $ 12,206 $ 11,169
Effect of change in accounting method for inventories, net of tax (4,194) 5,274 5,274
---------- ---------- ----------
As restated ..................................................... $ 14,931 $ 17,480 $ 16,443
========== ========== ==========
Per share amounts as previously reported ........................ $ 1.23 $ .80 $ .73
Effect of change in accounting method for inventories, net of tax (.27) .34 .34
---------- ---------- ----------
As restated ..................................................... $ .96 $ 1.14 $ 1.07
========== ========== ==========
</TABLE>
RECLASSIFICATION
Certain prior-year balances have been reclassified to conform with the
current-year presentation.
(3) MARKETABLE SECURITIES:
Investments in debt and equity securities are recorded as required by SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity Securities".
Under the requirements of SFAS No. 115, held-to-maturity securities, which are
fixed maturity securities that the Company has the ability and intent to hold
until maturity, are carried at amortized cost. Available-for-sale securities,
securities that the Company purchased without any specific intent to sell in the
near term, are carried at fair value with unrealized gains and losses included
directly in stockholders' equity, net of applicable deferred income taxes.
Trading securities, securities that are purchased with the intent of selling in
the near term, are recorded at fair value with unrealized gains and losses
included in income. The Company's marketable securities consist of high-grade
debt and equity securities that are all considered available for sale. The basis
upon which costs were determined in computing realized gains was specific
identification.
RIVIANA FOODS
24
<PAGE>
Available for Sale Portfolio June 30, 1996 July 2, 1995
- --------------------------------------------------------------------------------
Aggregate fair value ............................ $ 8,244 $ 10,029
Cost basis ...................................... 4,608 6,890
------- --------
Unrealized net gain before taxes ........... 3,636 3,139
Income taxes .................................... 1,272 1,099
------- --------
Unrealized gain, net of taxes .............. $ 2,364 $ 2,040
======= ========
Unrealized gains ................................ $ 3,696 $ 3,318
Unrealized losses ............................... (60) (179)
------- --------
Unrealized net gain before taxes ........... $ 3,636 $ 3,139
======= ========
Proceeds from sales of marketable securities .... $ 3,594 $ 1,056
Realized gross gains ............................ 992 753
Realized gross losses ........................... (15) --
(4) ACCRUED LIABILITIES:
Accrued liabilities consisted of the following:
June 30, 1996 July 2, 1995
- --------------------------------------------------------------------------------
Payroll, commissions and bonuses ............... $ 6,709 $ 7,375
Coupon redemption and advertising .............. 2,386 4,124
Taxes, other than income taxes ................. 1,425 380
Other .......................................... 1,898 1,761
------- -------
Total ................................ $12,418 $13,640
======= =======
(5) SHORT-TERM DEBT:
Interest rates related to short-term debt vary according to the country in
which the funds are borrowed, but generally approximate the market rate of
interest. The weighted average interest rate at June 30, 1996, was 9.39%. A
portion of the short-term debt at June 30, 1996, and July 2, 1995, is secured by
certain assets of the foreign subsidiaries. The Company has unused lines of
credit totaling about $60,497 at June 30, 1996.
(6) LONG-TERM DEBT:
Long-term debt consisted of the following:
June 30, 1996 July 2, 1995
- ------------------------------------------------------------------------------
Total long-term debt ............................. $5,905 $4,129
Less - Current maturities ........................ 2,261 1,757
------ ------
Long-term debt, net of current maturities ... $3,644 $2,372
====== ======
Total long-term debt at June 30, 1996, matures as follows:
1997 $ 2,261
1998 2,131
1999 1,267
2000 246
----------
Total $ 5,905
==========
RIVIANA FOODS
25
<PAGE>
(7) INCOME TAXES:
The Company determines tax expense and other deferred tax information using
the liability method in compliance with SFAS No. 109, "Accounting for Income
Taxes". Among other provisions, SFAS No. 109 requires the Company to compute
deferred tax amounts using the enacted corporate income tax rates for the
periods in which the taxes will be paid or refunds received.
The provision for income taxes consisted of the following:
1996 1995 1994
- --------------------------------------------------------------------------------
Federal ................................ $ 2,140 $ 4,506 $ 6,577
State .................................. 523 532 1,262
Foreign ................................ 1,805 2,322 2,608
------- ------- --------
Total current provision ........... 4,468 7,360 10,447
------- ------- --------
Federal ................................ 3,316 (396) (89)
Foreign ................................ (14) (1) 43
------- ------- --------
Total deferred provision (benefit) 3,302 (397) (46)
------- ------- --------
Income tax expense ................ $ 7,770 $ 6,963 $ 10,401
======= ======= ========
The difference between the statutory United States federal income tax rate and
the Company's global effective tax rate as reflected in the consolidated
statements of income was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-----------------------------------------------------------------------
Percent Percent Percent
Tax of Tax of Tax of
Expense Pretax Expense Pretax Expense Pretax
(Benefit) Income (Benefit) Income (Benefit) Income
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Taxes at U.S. federal statutory rate . $ 9,256 35.0% $ 7,752 35.0% $ 9,831 35.0%
Resolution of issues at less than
estimate previously provided .... (2,032) (7.7) -- -- -- --
Foreign earnings subject to tax rates
that are different than the
U.S. federal statutory rate ..... (443) (1.7) (1,082) (4.9) (939) (3.3)
State taxes, net of federal benefit .. 340 1.3 346 1.6 820 2.9
Taxes on dividends received from
foreign subsidiaries ............ 495 1.9 318 1.4 908 3.2
Other ................................ 154 .6 (371) (1.7) (219) (0.8)
------- ---- ------- ---- -------- ----
Income tax expense/effective rate $ 7,770 29.4% $ 6,963 31.4% $ 10,401 37.0%
======= ==== ======= ==== ======== ====
</TABLE>
The components of deferred taxes were as follows:
June 30, 1996 July 2, 1995
- --------------------------------------------------------------------------------
Staff termination indemnities and lease guarantees . $ 705 $1,388
Accrued employee benefits .......................... 691 829
State taxes ........................................ 770 924
Accrued liabilities ................................ 1,361 1,902
Allowance for doubtful accounts .................... 129 366
Other .............................................. 54 159
------- ------
Total deferred tax assets ..................... 3,710 5,568
------- ------
Property, plant and equipment and other ............ 6,696 7,457
Inventory .......................................... 2,041 --
Marketable securities .............................. 1,321 1,158
------- ------
Total deferred tax liabilities ................ 10,058 8,615
------- ------
Net deferred tax liabilities .................. $ 6,348 $3,047
======= ======
RIVIANA FOODS
26
<PAGE>
Income before income taxes, minority interest and extraordinary item of
foreign subsidiaries was $6,878, $9,384, and $9,305 for 1996, 1995, and 1994.
The Company does not provide deferred income taxes on unremitted earnings
of foreign subsidiaries, since such earnings are considered to be permanently
invested. Cumulative unremitted earnings of foreign subsidiaries were $30,274,
$27,843, and $21,406 as of June 30, 1996, July 2, 1995, and July 3, 1994.
(8) PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS:
Riviana has a defined benefit plan covering substantially all United States
employees. The benefits are based on years of service and the employee's
compensation. The Company's funding policy is to contribute annually at least
the minimum amount actuarially necessary to provide for retirement benefits.
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated balance sheets:
June 30, 1996 July 2, 1995
- --------------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $11,040 and $9,526 .... $ 12,802 $ 11,019
======== ========
Projected benefit obligation for service
rendered through fiscal year end ......... $ 15,010 $ 13,109
Plan assets at fair value, primarily listed
stocks, short-term cash investments,
and government securities ..................... 14,401 11,412
-------- --------
Plan assets below projected benefit obligation ..... (609) (1,697)
Unrecognized net asset at June 29, 1987, net of
amortization, arising from the initial
application of SFAS No. 87 being recognized
over nine years ............................... (3) (131)
Unrecognized net loss from experience different
from that assumed ............................. 728 3,325
Unrecognized prior service costs ................... 275 (1,209)
-------- --------
Prepaid pension cost included in accrued
liabilities .............................. $ 391 $ 288
======== ========
Net pension costs included the following components:
1996 1995 1994
- --------------------------------------------------------------------------------
Service cost-benefits earned during the year $ 1,588 $ 1,408 $ 1,505
Interest cost on projected benefit obligation 1,005 858 918
Actual return on plan assets ................ (2,421) (1,822) (353)
Net amortization and deferral ............... 1,428 1,111 (533)
------- ------- -------
Net pension cost ....................... $ 1,600 $ 1,555 $ 1,537
======= ======= =======
Significant assumptions:
Weighted average discount rate ......... 7.0% 7.5% 7.5%
Rate of increase in compensation levels 5.0 5.0 5.0
Long-term rate of return on plan assets 9.0 8.0 9.0
Riviana has a defined contribution plan which covers substantially all
United States employees. The Company contributes an amount equal to a percentage
of employee contributions. Total expense related to this plan was $403, $476 and
$518 during 1996, 1995 and 1994.
Riviana provides death and additional retirement benefits to certain key
employees. These plans are funded through Company-owned life insurance. The net
cash surrender value of the insurance policies is recorded as a noncurrent asset
in the accompanying consolidated balance sheets. The actuarially computed
present value of the retirement benefits is recorded as an other noncurrent
liability in the consolidated balance sheets. The Company recorded expense of
$175, $149 and $128 related to these plans for 1996, 1995 and 1994.
RIVIANA FOODS
27
<PAGE>
(9) RELATED PARTY TRANSACTIONS:
The Company paid $2,234, $1,144 and $5,457 for 1996, 1995 and 1994, to W.
Elton Kennedy, a director of the Company, or entities controlled by him for rice
purchases at market prices. Also, the Company and Kennedy Rice Dryers, Inc., a
corporation of which Mr. Kennedy is the principal stockholder and a director and
officer, each owns a 50% interest in South LaFourche Farm Partnership. The
Company and Mr. Kennedy are each contingently liable on a $2,175 promissory note
payable by the Partnership. The Company has also executed transactions with
other companies owned by certain directors which were not material to the
Company's results of operations. Management of the Company believes that the
foregoing transactions were on terms no less favorable to the Company than could
normally be obtained from unaffiliated parties.
(10) COMMITMENTS AND CONTINGENCIES:
LEASE COMMITMENTS
At June 30, 1996, future minimum lease payments and sublease rentals under
long-term operating lease obligations amounted to:
Gross Sublease
Lease Rental Net Lease
Payments Income Payments
---------- -------- ----------
1997 $ 2,836 $ 287 $ 2,549
1998 1,790 289 1,501
1999 1,369 280 1,089
2000 827 128 699
2001 290 66 224
Thereafter 1,087 150 937
---------- -------- ----------
Total $ 8,199 $ 1,200 $ 6,999
========== ======== ==========
Rent expense net of rental income was $3,252, $3,250 and $3,188 for 1996,
1995 and 1994.
LITIGATION
Various actions and claims, which arose in the ordinary course of business,
are pending against the Company. In the opinion of management, the ultimate
liability, if any, which may result from these actions and claims will not
materially affect the financial position or future results of operations of the
Company.
BUY-SELL AGREEMENT
As of June 30, 1996, the Company had an $8,681 investment in Boost which
represents a 49% ownership interest. Under the Boost stockholder agreement,
effective in 1997 either stockholder has the right to purchase the other's
interest. The initial bid price offered by one stockholder to the other, if not
accepted, would require the rejecting stockholder to counteroffer at the initial
bid price plus five percent. Each rejection thereafter would also require a five
percent premium over the prior offer until one stockholder accepts.
(11) CAPITAL STOCK:
COMMON STOCK
At June 30, 1996, the Company has outstanding 2,168 shares of common stock
sold to directors, officers and key employees of the Company or Boost at a
discount of $2,287. The amount of discount was determined by the Board of
Directors and represents a percentage reduction of about 50% from the formula
based estimate of fair value at the time of sale. The majority of the shares
discounted were sold as an inducement for predecessor management to continue
employment and to participate in the initial capitalization of the Company in
1986. The discount is recorded in the accompanying consolidated financial
statements as a reduction of stockholders' equity. Under a contractual agreement
with the stockholders, sales of these shares are restricted and the discount
must be repaid when the shares are sold. On May 17, 1996, the Board of Directors
approved an amendment to the contractual agreement which will remove the
restriction regarding the sale of these shares but will not remove the
obligation to repay the discount upon sale of any of the shares. This amendment
is pending completion of legal documentation and filing with the Securities and
Exchange Commission.
RIVIANA FOODS
28
<PAGE>
There were no sales of common stock at a discount in 1996. Sales of common
stock at a discount for the years 1995 and 1994 were as follows:
Formula Based
Aggregate Number Estimate of
Year of Shares Fair Value Discount
- --------------------------------------------------------------------
1995 5 $ 33 $ 16
1994 62 332 167
On December 28, 1994, the stockholders of the Company approved a
twelve-for-one split of common stock and an increase in par value from $.01 per
share before the split to $1.00 per share after the split. Accordingly, all
common share references in the financial statements have been restated to
reflect the split, unless otherwise indicated.
The Company's common stock has traded on the Nasdaq National Market System
(trading symbol RVFD) since the initial public offering on March 6, 1995, at a
price of $12.00.
PREFERRED STOCK
On December 28, 1994, the stockholders of the Company approved the
authorization of 5,000 shares of $1.00 per share par value preferred stock. No
shares of preferred stock have been issued.
(12) STOCK OPTION PLANS:
On December 28, 1994, the Company's stockholders adopted an incentive stock
option plan ("1994 Plan"). Under the terms of the 1994 Plan, a committee of the
Board of Directors may grant options to eligible employees of the Company or
Boost, including officers, that will allow the holders of the options to
purchase shares of common stock at the fair market value on the date the options
are granted. A total of 795 shares of common stock have been reserved for
issuance pursuant to options that may be granted under the 1994 Plan. Options
granted under the 1994 Plan have a ten-year term and will become exercisable no
sooner than one year after the date of the grant. The following summary presents
information with regard to options issued under the 1994 Plan:
1996 1995
- --------------------------------------------------------------------------------
Options outstanding, beginning of year ............... 398 --
Granted .............................................. -- 400
Exercised ............................................ (12) --
Canceled ............................................. (11) (2)
---- ----
Options outstanding, end of year ..................... 375 398
==== ====
Option price at exercise ............................. $12.00 --
Options exercisable, end of year ..................... 65 --
Option price ......................................... $12.00 --
On October 11, 1995, the Company's stockholders adopted a non-employee
directors stock option plan ("1995 NEDSOP") which was retroactively effective
May 17, 1995. The 1995 NEDSOP permits the issuance of options to purchase up to
250 shares of common stock to directors who are not employees of the Company and
who beneficially own less than 2% of the outstanding common stock of the
Company. Under this plan, options to purchase common stock at the fair market
value on the date of the grant are automatically granted to each director
annually on May 17 beginning May 17, 1995, for existing directors, and upon
election to the Board of Directors and each election anniversary thereafter for
directors elected after the start of the plan. Originally, each grant was for 5
shares. Effective May 17, 1996, the 1995 NEDSOP was amended to grant 2 shares
for each of the described anniversaries in the future. During 1996 and 1995,
options for 8 and 20 shares at $18.50 and $13.625 per share were granted to four
non-employee directors. As of June 30, 1996, options for a total of 28 shares
were outstanding and 5 were exercisable. No options have been exercised or
canceled.
RIVIANA FOODS
29
<PAGE>
(13) SEGMENT INFORMATION:
INDUSTRY SEGMENTS
The Company operates in one dominant industry segment which involves the
processing, marketing and distribution of food products.
GEOGRAPHIC SEGMENTS
The Company's export sales, other than those intercompany sales reported
below as sales between geographic areas, are not significant. Sales between
geographic areas consist of sales of raw materials and finished food products
which are sold at adjusted market prices. The Company does not derive more than
10% of its revenue from any single customer. Corporate assets consist primarily
of cash, cash equivalents, marketable securities, investments in unconsolidated
affiliates and other assets.
The Company's geographic area data are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Domestic ................................................................ $ 254,403 $ 241,461 $ 242,063
Europe .................................................................. 116,384 117,180 115,881
Central America ......................................................... 69,705 68,588 61,199
--------- --------- ---------
Total consolidated ............................................ $ 440,492 $ 427,229 $ 419,143
========= ========= =========
Sales between geographic areas:
Domestic ................................................................ $ 1,717 $ 2,209 $ 2,784
Central America ......................................................... 11,041 9,636 8,499
Eliminations ............................................................ (12,758) (11,845) (11,283)
--------- --------- ---------
Total consolidated ............................................ $ 0 $ 0 $ 0
========= ========= =========
Income:
Operating income:
Domestic ........................................................... $ 26,509 $ 20,832 $ 26,680
Europe ............................................................. 1,639 2,013 2,280
Central America .................................................... 6,746 8,496 8,536
--------- --------- ---------
Total operating income ........................................ 34,894 31,341 37,496
Equity in earnings of unconsolidated affiliates ......................... 1,819 1,665 1,745
General corporate expenses .............................................. (9,071) (9,024) (9,392)
Interest expense ........................................................ (2,814) (3,089) (5,080)
Other income (expense), net ............................................. 1,618 1,255 3,320
--------- --------- ---------
Income before income taxes, minority interest and extraordinary item $ 26,446 $ 22,148 $ 28,089
========= ========= =========
Identifiable assets at end of year:
Domestic ................................................................ $ 96,381 $ 85,642 $ 88,660
Europe .................................................................. 39,619 40,441 39,538
Central America ......................................................... 31,108 32,891 26,166
--------- --------- ---------
Total identifiable assets ..................................... 167,108 158,974 154,364
Corporate assets ........................................................ 15,396 16,709 21,271
--------- --------- ---------
Total assets .................................................. $ 182,504 $ 175,683 $ 175,635
========= ========= =========
</TABLE>
RIVIANA FOODS
30
<PAGE>
(14) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
Quarters Ended
----------------------------------------------------------
September December March June Year
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Net sales ..................................... $101,856 $112,923 $ 114,650 $ 111,063 $ 440,492
Gross profit .................................. 27,996 33,888 30,842 30,853 123,579
Income before income
taxes and minority interest .............. 4,639 8,215 6,639 6,953 26,446
Net income .................................... 3,015 5,345 4,752 5,230 18,342
Per share:
Earnings ................................. .19 .34 .30 .33 1.16
Cash dividends paid ...................... .0833 .0833 .0900 .0900 .3466
Market price:
High ................................ 14.125 14.000 15.000 19.000 19.000
Low ................................. 11.625 12.250 12.750 14.375 11.625
1995
Net sales ..................................... $100,909 $109,839 $ 109,201 $ 107,280 $ 427,229
Gross profit .................................. 25,844 32,791 32,826 31,387 122,848
Income before income
taxes and minority interest .............. 3,088 6,759 4,942 7,359 22,148
Net income .................................... 1,958 4,405 3,060 5,508 14,931
Per share:
Earnings ................................. .13 .29 .20 .35 .96
Cash dividends paid ...................... .0833 -- .0833 .0833 .2499
Market price:
High ................................ -- -- 13.875 14.875 14.875
Low ................................. -- -- 12.250 11.750 11.750
</TABLE>
Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not equal
the annual earnings per share.
RIVIANA FOODS
31
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Riviana Foods Inc.:
We have audited the accompanying consolidated balance sheets of Riviana
Foods Inc. (a Delaware corporation) and subsidiaries as of June 30, 1996, and
July 2, 1995, and the related consolidated statements of income, capital
accounts and retained earnings, other equity accounts and cash flows for each of
the three fiscal years in the period ended June 30, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 Riviana
Foods Inc. and subsidiaries as of June 30, 1996, and July 2, 1995, and the
results of their operations and their cash flows for each of the three fiscal
years in the period ended June 30, 1996, in conformity with generally accepted
accounting principles.
As discussed in Note 2 to the consolidated financial statements, effective
July 3, 1995, the Company changed its method of accounting for domestic rice
inventories.
Houston, Texas
August 12, 1996
RIVIANA FOODS
32
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in his capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ FRANK A. GODCHAUX III
Frank A. Godchaux III,
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in his capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ CHARLES R. GODCHAUX
Charles R. Godchaux,
Vice Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in her name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in her capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ LESLIE K. GODCHAUX
Leslie K. Godchaux, Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in her name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in her capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ THERESA G. PAYNE
Theresa G. Payne, Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in his capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ W. ELTON KENNEDY
W. Elton Kennedy, Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in his capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ E. JAMES LOWREY
E. James Lowrey, Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in his capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ PATRICK W. ROSE
Patrick W. Rose, Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints
Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996, together with any and all subsequent amendments thereof, in his capacity
as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue
thereof.
September 25, 1996 /S/ THOMAS B. WALKER, JR.
Thomas B. Walker, Jr., Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RIVIANA FOODS INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,086
<SECURITIES> 8,244
<RECEIVABLES> 42,109
<ALLOWANCES> 419
<INVENTORY> 52,884
<CURRENT-ASSETS> 112,614
<PP&E> 86,268
<DEPRECIATION> 33,921
<TOTAL-ASSETS> 182,504
<CURRENT-LIABILITIES> 51,621
<BONDS> 0
0
0
<COMMON> 15,883
<OTHER-SE> 100,623
<TOTAL-LIABILITY-AND-EQUITY> 182,504
<SALES> 440,492
<TOTAL-REVENUES> 440,492
<CGS> 316,913
<TOTAL-COSTS> 316,913
<OTHER-EXPENSES> 97,756
<LOSS-PROVISION> (27)<F1>
<INTEREST-EXPENSE> 2,814
<INCOME-PRETAX> 26,446
<INCOME-TAX> 7,770
<INCOME-CONTINUING> 18,342
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,342
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
<FN>
<F1>(BAD DEBTS) CREDIT
</FN>
</TABLE>
