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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 0-25294
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RIVIANA FOODS INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0177572
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or ogranization)
2777 ALLEN PARKWAY
HOUSTON, TX 77019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 529-3251
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock of the Registrant, par value $1.00
per share, outstanding at October 26, 1998, was 14,923,890.
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<PAGE>
RIVIANA FOODS INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 27, 1998
INDEX
PAGE
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at September 27, 1998
and June 28, 1998............................................1
Consolidated Statements of Income for the Three
Months Ended September 27, 1998 and September 28, 1997.......2
Consolidated Statements of Cash Flows for the
Three Months Ended September 27, 1998 and
September 28, 1997...........................................3
Notes to Consolidated Financial Statements......................4
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations...............6
Part II -- Other Information
Item 6 -- Exhibits and Reports on Form 8-K...........................10
Signature...............................................................11
Exhibit Index...........................................................12
<PAGE>
Part I -- Financial Information
Item 1 -- Financial Statements
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Amounts)
September 27, 1998 June 28, 1998
------------------ -------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash .......................................... $ 5,443 $ 7,609
Cash equivalents .............................. 6,821 9,588
Marketable securities ......................... 4,181 4,328
Accounts receivable, less allowance for
doubtful accounts of $1,289 and $1,265 ...... 41,230 40,514
Inventories ................................... 49,833 49,566
Prepaid expenses .............................. 2,467 2,008
--------- ---------
Total current assets .................. 109,975 113,613
PROPERTY, PLANT AND EQUIPMENT:
Land .......................................... 3,524 3,530
Buildings ..................................... 25,392 25,271
Machinery and equipment ....................... 88,904 87,668
--------- ---------
Property, plant and equipment - gross ..... 117,820 116,469
Less - Accumulated depreciation ............... (42,287) (41,241)
--------- ---------
Property, plant and equipment - net ....... 75,533 75,228
INVESTMENTS IN UNCONSOLIDATED AFFILIATES ........ 10,909 10,745
OTHER ASSETS ................................... 5,636 5,742
--------- ---------
Total assets ...................... $ 202,053 $ 205,328
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ............................... $ 1,221 $ 1,280
Current maturities of long-term debt .......... 1,412 1,425
Accounts payable .............................. 29,395 23,988
Accrued liabilities ........................... 17,288 14,894
Income taxes payable .......................... 7,643 6,255
--------- ---------
Total current liabilities ................. 56,959 47,842
LONG-TERM DEBT, net of current maturities ....... 1,732 1,861
DUE TO AFFILIATES ............................... 321 1,347
DEFERRED INCOME TAXES ........................... 6,304 6,805
OTHER NONCURRENT LIABILITIES .................... 3,247 3,246
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS .............................. 6,294 6,483
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par, 5,000 shares
authorized, none issued
Common stock, $1 par, 24,000 shares
authorized, 15,883 issued ................... 15,883 15,883
Paid-in capital ............................... 6,458 6,455
Retained earnings ............................. 128,188 125,503
Accumulated other comprehensive income ........ (4,973) (4,964)
Treasury stock, at cost, 920 and 254 shares ... (18,360) (5,133)
--------- ---------
Total stockholders' equity ............ 127,196 137,744
--------- ---------
Total liabilities and stockholders'
equity ............................... $ 202,053 $ 205,328
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
------------------ ------------------
<S> <C> <C>
NET SALES ....................................... $ 107,322 $ 108,014
COST OF SALES ................................... 79,433 80,656
--------- ---------
Gross profit ................................ 27,889 27,358
--------- ---------
COSTS AND EXPENSES:
Advertising, selling and warehousing .......... 16,969 16,820
Administrative and general .................... 5,311 5,256
--------- ---------
Total costs and expenses .................... 22,280 22,076
--------- ---------
Income from operations ...................... 5,609 5,282
OTHER INCOME (EXPENSE):
Gain on sale of marketable securities ......... 1,065
Interest income ............................... 349 227
Interest expense .............................. (192) (289)
Equity in earnings of unconsolidated affiliates 121 196
Other - net ................................... 573 (337)
--------- ---------
Total other income (expense) ................ 851 862
--------- ---------
Income before income taxes and
minority interests ....................... 6,460 6,144
INCOME TAX EXPENSE .............................. 1,955 2,127
MINORITY INTERESTS IN EARNINGS OF
CONSOLIDATED SUBSIDIARIES ................... 104 93
--------- ---------
Net income .................................. $ 4,401 $ 3,924
========= =========
Earnings per share:
Basic ................................... $ 0.28 $ 0.25
Diluted ................................. 0.28 0.25
Weighted average common shares outstanding:
Basic .................................. 15,491 15,753
Diluted ................................ 15,713 15,936
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................ $ 4,401 $ 3,924
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ........................ 1,368 1,124
Deferred income taxes ................................ (451)
Gain on disposition of assets ........................ (7) (1,065)
Equity in earnings of unconsolidated affiliates ...... (121) (196)
Change in assets and liabilities:
Accounts receivable, net ......................... (683) 716
Inventories ...................................... (734) (3,389)
Prepaid expenses ................................. (470) (702)
Other assets ..................................... 615 142
Accounts payable and accrued liabilities ......... 7,864 8,048
Income taxes payable ............................. 1,399 1,020
Other noncurrent liabilities ..................... 17 91
Minority interests ............................... (159) (161)
-------- --------
Net cash provided by operating activities ...... 13,039 9,552
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ................ (1,990) (2,118)
Proceeds from disposals of property, plant and equipment .. 7
Proceeds from sale of marketable securities ............... 1,183
Collection of notes receivable ............................ 9 9
Due to affiliates ......................................... (935) 280
Increase in marketable securities ......................... (1) (1)
-------- --------
Net cash used in investing activities .......... (2,910) (647)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term debt ............................... (26) (1,535)
Additions to long-term debt ............................... 426 192
Repayments of long-term debt .............................. (479) (581)
Dividends paid ............................................ (1,721) (1,575)
Repurchases of common stock ............................... (13,311) (71)
Sales of common stock ..................................... 69 97
-------- --------
Net cash used in financing activities .......... (15,042) (3,473)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS ................................... (20) (131)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............. (4,933) 5,301
CASH AND CASH EQUIVALENTS, beginning of period ............... 17,197 7,040
-------- --------
CASH AND CASH EQUIVALENTS, end of period ..................... $ 12,264 $ 12,341
======== ========
CASH PAID DURING THE PERIOD FOR:
Interest .................................................. $ 193 $ 310
Income taxes .............................................. 306 529
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
RIVIANA FOODS INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In Thousands, Except Per Share Amounts)
(Unaudited)
1. Basis for Preparation of the Consolidated Financial Statements
The consolidated financial statements have been prepared by Riviana
Foods Inc. and subsidiaries ("the Company"), without audit, with the exception
of the June 28, 1998, consolidated balance sheet. The financial statements
include consolidated balance sheets, consolidated statements of income and
consolidated statements of cash flows. Certain amounts in the prior year have
been reclassified to conform to the current year presentation. In the opinion of
management, all adjustments, which consist of normal recurring adjustments,
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made.
The financial statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended June 28, 1998.
2. Earnings per Share
Basic and diluted earnings per share are computed by dividing net
income by the respective number of weighted average common shares outstanding.
The reconciliation of weighted average common shares outstanding used in
computing basic and diluted earnings per share is as follows:
THREE MONTHS ENDED
---------------------------------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
------------------ ------------------
Weighted average common shares outstanding:
Basic ................................... 15,491 15,753
Stock options ........................... 222 183
------ ------
Diluted ................................. 15,713 15,936
====== ======
3. Inventories
Inventories were composed of the following:
SEPTEMBER 27, 1998 JUNE 28, 1998
------------------ -------------
Raw materials ............................ $15,446 $ 9,390
Work in process .......................... 48 23
Finished goods ........................... 28,382 34,007
Packaging supplies ....................... 5,957 6,146
------- -------
Total ........................ $49,833 $49,566
======= =======
4
<PAGE>
4. Comprehensive Income
Effective June 29, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". The
adoption of this statement had no impact on net income or stockholders' equity.
SFAS No. 130 requires the reporting of comprehensive income, which includes net
income plus other comprehensive income, net of taxes. Other comprehensive income
includes unrealized gains (losses) on marketable securities, net of tax, and
foreign currency translation adjustment. The components of comprehensive income
were as follows:
THREE MONTHS ENDED
--------------------------------------
SEPTEMBER 27, 1998 SEPTEMBER 28, 1997
------------------ ------------------
Net income ................................. $ 4,401 $ 3,924
Other comprehensive income:
Unrealized gains (losses)
on marketable securities,
net of tax:
Unrealized gains (losses) ............... (96) 481
Realized (gains) reclassified
to net income.......................... (692)
Foreign currency
translation adjustment ................. 87 (1,013)
------- -------
Total comprehensive income ................. $ 4,392 $ 2,700
======= =======
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THREE MONTHS ENDED SEPTEMBER 27, 1998 AND SEPTEMBER 28, 1997
RESULTS OF OPERATIONS
For the three months ended September 27, 1998, sales declined $0.7 million
or 0.6% to $107.3 million from $108.0 million for the previous fiscal year. In
fiscal 1997, the Company entered into a joint venture with a major rice milling
company in Arkansas, which is involved in the cogeneration of steam and
electricity using rice hulls as fuel. This unit added $0.2 million to sales in
the current quarter. Excluding the effect of the cogeneration business, sales
for the period ended September 27, 1998 declined by $0.9 million or 0.8% to
$106.7 million from $107.6 last year. Increased volumes added $2.8 million to
sales while a combination of price and product mix reduced sales by $2.6 million
and unfavorable currency translation reduced sales a further $1.1 million. In
the domestic rice business sales of $63.3 million increased $0.3 million or 0.5%
from the prior year sales of $63.0 million. Due to competitive market conditions
and declining total-market category sales, the Company's retail sector sales of
$45.7 million were even with the prior year. Within the retail sector, sales of
regular rice decreased by $0.5 million or 2.2% due primarily to a change in the
mix of products sold with more large size units being sold in the current
quarter. Unit volume sales of regular rice products were equal to the prior
year. Sales of value-added products increased by $0.2 million or 1.0%. Sales of
brown rice increased over the prior year by $0.3 million due to a 16.0% increase
in unit volumes. In the non-retail sector, sales increased $0.3 million or 2.1%.
Sales increased $0.4 million or 24.3% in the foodservice sector with increased
volumes adding $0.9 million and a change in the product mix reducing sales by
$0.5 million. The industrial sector recorded a 25.9% increase in unit volumes
and a $0.6 million or 27.9% increase in sales. In the lower margin
export/commodity sector, sales declined by $0.7 million or 5.6%. Increased
volumes added $0.4 million to sales and a combination of price and product mix
decreased sales by $1.1 million. Sales in Central America increased $1.1 million
or 5.4% to $20.0 million compared to $18.9 million in the prior year. Higher
volumes were recorded in both fruit nectar and juice products and cookie and
cracker product lines. In total, higher volumes increased sales by $1.9 million.
Higher prices, particularly in the cookie and cracker product lines, increased
sales by $0.8 million and unfavorable currency translation reduced sales by $1.6
million. In Europe, sales declined by $2.3 million or 8.8% to $23.4 million from
$25.7 million last year. Lower unit volumes decreased sales by $1.6 million as
the Company continued to eliminate sales of certain lower margin products. A
combination of price and product mix reduced sales by $1.2 million and favorable
currency translation increased sales by $0.5 million.
Gross profit increased $0.5 million or 1.9% to $27.9 million from $27.4
million a year ago. Gross profit as a percentage of sales increased to 26.0%
from 25.3% in the corresponding period last year. In the domestic rice business
gross profit increased $0.2 million or 1.1 % to $19.3 million. As a percentage
of sales gross margin improved to 30.5% from 30.4% last year. In this segment,
gross profit as a percentage of sales improved primarily due to lower rice
costs. In Central America, gross profit increased $0.2 million or 3.4% to $6.0
million. The increase in gross profit was related to the increase in sales
volumes. As a percentage of sales, in Central America, gross profit declined to
30.1% from 30.7% last year. The change was primarily related to lower volumes of
cookies and cracker product sales in Costa Rica due to a price increase
resulting from the imposition of a consumer tax on sales. In Europe, the gross
profit was even with last year but increased as a percentage of sales to 10.6%
from 9.6% in the same period last year. Gross profit improved due to improved
margins in the rice business and the reduction in sales of certain lower margin
products.
Operating income increased $0.3 million or 6.2% to $5.6 million from $5.3
million for the same period last year. As a percentage of sales, operating
income was 5.2%, up from 4.9% last year. In the domestic segment, operating
income increased by $0.6 million to $2.8 million from $2.2 million last year.
The increase in operating income in the domestic segment resulted from the
increase in gross profit
6
<PAGE>
addressed previously and a reduced level of advertising and promotional
spending. In Central America, operating income decreased by $0.3 million or
11.7% to $2.2 million. The reduction in operating income in Central America was
a result of increased advertising and promotional spending required to counter a
price increase in Costa Rica and additional expenses related to establishment of
a distribution operation in El Salvador. In Europe, operating profit was even
with last year at $0.7 million. However, operating profit as a percentage of
sales did increase to 2.9% from 2.6% last year as a result of the improved
margins in the rice business and the elimination of certain lower margin
products.
The Company reported net interest income of $0.2 million for the quarter
ended September 27, 1998 compared to net interest expense of $0.1 million in the
prior year. Interest expense declined and interest income increased in the
current quarter as a result of lower borrowings due to improved cash flow and
lower international interest rates.
Other income, excluding interest, decreased from the previous year by $0.3
million to $0.6 million from $0.9 million. Gains on sales of marketable
securities and equity in earnings of unconsolidated affiliates declined by $1.1
million and $0.1 million respectively. Other miscellaneous income increased by
$0.9 million primarily due to the settlement of litigation.
Income tax expense of $2.0 million reflected a decrease of $0.1 million
from the same period last year and the effective rate decreased to 30.3% from
34.6%. This decrease in the rate reflected energy tax credits related to the
Company's cogeneration joint venture and Central American tax credits.
Net income for the current quarter increased $0.5 million or 12.2% to
$4.4 million from $3.9 million in the same period last year. Diluted
earnings per share were $0.28 compared to $0.25.
LIQUIDITY AND FINANCIAL POSITION
Cash provided by operating activities increased by $3.5 million to $13.0
million for the quarter ended September 27, 1998. The increase in cash provided
by operations resulted from increased income before non-cash charges for
depreciation and amortization and a reduction in the level of working capital
employed in the business in the current period.
Cash used in investing activities increased by $2.3 million to $2.9
million as compared to cash used in investing activities in the prior year of
$0.6 million. Additions to property, plant and equipment in the current quarter
totaled $2.0 million, a decrease of $0.1 million from the comparable period last
year. There was also a decrease in amounts due to affiliates of $1.2 million.
Proceeds from the sale of marketable securities decreased $1.2 million.
Cash used in financing activities increased by $11.6 million in the
quarter ended September 27, 1998 to $15.0 million. In the current year the
Company had a net reduction in short and long-term debt of $0.1 million compared
to a net reduction of $1.9 million in the same period last year. Funds used for
dividend payments increased by $0.1 million and, during the quarter ended
September 27, 1998, 671.0 thousand shares of the Company's common stock were
repurchased at a cost of $13.3 million.
On October 21, 1998 the Company's board of directors raised the quarterly
dividend on the Company's common stock to $0.125 per share from $0.11 per share,
for an indicated annual rate of $0.50 per share.
As of September 27, 1998, the board of directors of the Company had
authorized the open-market repurchase, from time to time, of up to 1.5 million
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. For the three months ended September 27, 1998, the Company spent
$13.3 million to
7
<PAGE>
repurchase 671.0 thousand shares at an average price of $19.83 per share.
Through September 27, 1998 the Company has repurchased a total of 1.0 million
shares and 94 thousand shares have been reissued upon exercise of employee stock
options. On October 21, 1998, the board of directors of the Company authorized
the open-market repurchase, from time to time, of up to an additional 500
thousand shares.
The Company's financial position remains strong and the Company believes
that the combination of its working capital, unused and available short-term
credit facilities and cash flow from operations will provide the capital
resources and liquidity to meet its needs.
IMPACT OF THE YEAR 2000 ISSUE
The Company is currently working to resolve the potential impact of the
year 2000 on the processing of date-sensitive data by the Company's computerized
information systems. The year 2000 is critical to these systems as many computer
programs are written using two digits rather than four to define the applicable
year. As a result, any of the Company's computer applications that have
date-sensitive programs may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or miscalculation
causing disruptions including but not limited to a temporary inability to
process transactions, issue invoices, communicate with customers and financial
institutions and update internal accounting systems. If not corrected, such
disruptions could have a significant impact on the Company's operations.
The Company has initiated a Company-wide program to prepare the Company's
computer systems and applications for the year 2000. Based on present
information, the Company believes that it will be able to achieve year 2000
compliance through modification of some existing programs and the replacement of
other programs with new programs that are already year 2000 compliant. The
Company will utilize both internal and external resources to reprogram, or
replace, and test software for year 2000 compliance. The Company plans to
complete the year 2000 conversion project by July 1, 1999. The total project
costs are presently estimated not to exceed $1.0 million and will be expensed as
incurred, unless new software is purchased which costs will be capitalized.
The Company is taking steps to resolve year 2000 compliance issues that
may be created by customers, suppliers and financial institutions with whom the
Company does business. However, there can be no guarantee that the systems of
other entities will be converted timely. A failure to convert by another entity
could have a significant adverse effect on the Company.
The costs of the year 2000 conversion project and the date on which the
Company plans to complete the project are based on management's best estimates,
which were derived using numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other factors. There can be no guarantee that these estimates will be achieved
and actual results could vary significantly from current estimates.
The Company does not have a written contingency plan to address the issues
that could arise should the Company or any of its suppliers or customers not be
prepared to accommodate year 2000 issues timely. The Company believes that in an
emergency it could revert to the use of manual systems that do not rely on
computers and could perform the minimum functions required to maintain the flow
of goods and provide information reporting to maintain satisfactory control of
the business. Should the Company have to utilize manual systems, it is uncertain
that it could maintain the same level of operations and this could have a
material adverse impact on the business. The Company intends to maintain
constant surveillance on this situation and will develop such contingency plans
as are required by the changing environment.
8
<PAGE>
EURO CONVERSION
The Company operates in Europe through a subsidiary and two joint ventures
in the United Kingdom and Belgium. On January 1, 1999 many of the member
countries of the European Union are scheduled to establish fixed conversion
rates between the existing sovereign currencies and the euro. At this time, the
United Kingdom is not participating in this change. However, the Company's
European operations do conduct business in certain of the participating member
countries. The Company believes it is taking the necessary steps to accommodate
this change and does not believe the euro conversion will have a significant
impact on its operations.
FORWARD LOOKING STATEMENTS
The statements contained in this Form 10-Q include forward looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Act of 1934, as amended. Although the
Company believes that the expectations reflected in such forward looking
statements are based upon reasonable assumptions, the Company can give no
assurance that these expectations will be achieved.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 15, Letters from Arthur Andersen LLP dated October 20,
1998, regarding unaudited financial statements.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
10
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
RIVIANA FOODS INC.
Dated: November 4, 1998 By: /s/ E. WAYNE RAY, JR.
E. Wayne Ray, Jr.
Vice President, Chief Financial
Officer and Chief Accounting
Officer
11
<PAGE>
EXHIBIT INDEX
SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- -- ------------- -----------
15 Letters from Arthur Andersen LLP dated October 20, 1998, 13
regarding unaudited financial statements
12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Riviana Foods Inc.:
We have reviewed the accompanying consolidated balance sheet of Riviana Foods
Inc. (a Delaware corporation) and subsidiaries as of September 27, 1998, and the
related consolidated statements of income and cash flows for the three-month
periods ended September 27, 1998, and September 28, 1997. These consolidated
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
October 20, 1998
13
<PAGE>
October 20, 1998
Riviana Foods Inc.:
We are aware that Riviana Foods Inc. has incorporated by reference in its Form
S-8 Registration Statement covering the 1994 Stock Option Plan, its Form S-8
Registration Statement covering the Amended and Restated 1995 Non-Employee
Director Stock Option Plan, its Form S-8 Registration Statement covering the
1997 Stock Option Plan and the Riviana Foods Inc. Savings Plan and its Form S-3
Registration Statement, its Form 10-Q for the quarter ended September 27, 1998,
which includes our report dated October 20, 1998, covering the unaudited interim
financial information contained therein. Pursuant to Regulation C of the
Securities Act of 1933, that report is not considered a part of the registration
statements prepared or certified by our firm or a report prepared or certified
by our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN LLP
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM RIVIANA FOODS INC.'S FIRST QUARTER FORM 10Q FOR FISCAL 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-27-1999
<PERIOD-END> SEP-27-1998
<CASH> 5,443
<SECURITIES> 4,181
<RECEIVABLES> 41,230
<ALLOWANCES> 1,289
<INVENTORY> 49,833
<CURRENT-ASSETS> 109,975
<PP&E> 117,820
<DEPRECIATION> 42,287
<TOTAL-ASSETS> 202,053
<CURRENT-LIABILITIES> 56,959
<BONDS> 0
0
0
<COMMON> 15,883
<OTHER-SE> 111,313
<TOTAL-LIABILITY-AND-EQUITY> 202,053
<SALES> 107,322
<TOTAL-REVENUES> 107,322
<CGS> 79,433
<TOTAL-COSTS> 22,280
<OTHER-EXPENSES> 851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (192)
<INCOME-PRETAX> 6,460
<INCOME-TAX> 1,955
<INCOME-CONTINUING> 4,401
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,401
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.28
</TABLE>
