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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 December 28, 1997
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 February 2, 1998 was 15,737,050.
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<PAGE>
RIVIANA FOODS INC.
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 28, 1997
INDEX
PAGE
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at December 28, 1997 and June 29, 1997.......1
Consolidated Statements of Income for the Three Months and Six Months
Ended December 28, 1997 and December 29, 1996...........................2
Consolidated Statements of Cash Flows for the Six Months Ended
December 28, 1997 and December 29, 1996.................................3
Notes to Consolidated Financial Statements...............................4
Item 2 -- Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................5
Part II -- Other Information
Item 6 -- Exhibits and Reports on Form 8-K.................................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)
<TABLE>
<CAPTION>
<S> <C> <C>
December 28, 1997 June 29, 1997
----------------- -------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash $5,417 $4,562
Cash equivalents 6,143 2,478
Marketable securities 4,459 4,405
Accounts receivable, less allowance for doubtful accounts of $597
and $529 43,750 43,493
Inventories 53,351 48,454
Prepaid expenses 2,158 2,295
--------- ---------
Total current assets 115,278 105,687
PROPERTY, PLANT AND EQUIPMENT:
Land 3,539 3,550
Buildings 23,430 21,848
Machinery and equipment 83,941 81,830
--------- ---------
Property, plant and equipment - gross 110,910 107,228
Less - Accumulated depreciation (39,743) (38,065)
--------- ---------
Property, plant and equipment - net 71,167 69,163
INVESTMENTS IN UNCONSOLIDATED AFFILIATES 11,621 11,471
OTHER ASSETS 5,378 5,568
--------- ---------
Total assets $203,444 $191,889
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $2,616 $5,011
Current maturities of long-term debt 1,427 1,863
Accounts payable 27,335 20,629
Accrued liabilities 15,668 13,940
Income taxes payable 5,942 5,382
--------- ---------
Total current liabilities 52,988 46,825
LONG-TERM DEBT, net of current maturities 2,375 2,619
DUE TO AFFILIATES 729 135
DEFERRED INCOME TAXES 5,372 5,884
OTHER NONCURRENT LIABILITIES 2,877 2,995
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS 6,325 6,355
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 6,226 6,215
Retained earnings 116,829 109,851
Unrealized gains on marketable securities, net of taxes 2,383 2,273
Cumulative foreign currency translation adjustment (6,265) (5,059)
Treasury stock, at cost, 137 and 130 shares (2,278) (2,087)
--------- ---------
Total stockholders' equity 132,778 127,076
--------- ---------
Total liabilities and stockholders' equity $203,444 $191,889
========= =========
</TABLE>
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>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
-------------------------------------- --------------------------------------
December 28, 1997 December 29, 1996 December 28, 1997 December 29, 1996
----------------- ----------------- ----------------- -----------------
NET SALES $121,472 $118,791 $229,486 $223,796
COST OF SALES 84,461 85,185 165,117 163,626
----------------- ----------------- ----------------- -----------------
Gross profit 37,011 33,606 64,369 60,170
----------------- ----------------- ----------------- -----------------
COSTS AND EXPENSES:
Advertising, selling and warehousing 23,445 20,530 40,265 37,181
Administrative and general 4,824 4,754 10,080 9,536
----------------- ----------------- ----------------- -----------------
Total costs and expenses 28,269 25,284 50,345 46,717
----------------- ----------------- ----------------- -----------------
Income from operations 8,742 8,322 14,024 13,453
OTHER INCOME (EXPENSE):
Gain on sale of marketable securities 0 753 1,065 1,112
Interest income 287 126 514 223
Interest expense (244) (454) (533) (1,014)
Equity in earnings of unconsolidated affiliates 637 386 833 616
Other income (expense) - net (150) (448) (487) (709)
----------------- ----------------- ----------------- -----------------
Total other income 530 363 1,392 228
----------------- ----------------- ----------------- -----------------
Income before income taxes and
minority interests 9,272 8,685 15,416 13,681
INCOME TAX EXPENSE 2,785 2,827 4,912 4,513
MINORITY INTERESTS IN EARNINGS OF
CONSOLIDATED SUBSIDIARIES 79 80 172 150
----------------- ----------------- ----------------- -----------------
Net income $6,408 $5,778 $10,332 $9,018
================= ================= ================= =================
Earnings per share:
Basic $0.41 $0.37 $0.66 $0.57
Diluted 0.40 0.36 0.65 0.57
Weighted average common shares outstanding:
Basic 15,751 15,821 15,752 15,839
Diluted 15,961 15,925 15,947 15,937
</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 of Dollars)
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended
-------------------------------------
December 28, 1997 December 29, 1996
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $10,332 $9,018
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,323 2,279
Deferred income taxes (572) (117)
Gain on disposition of assets (1,067) (1,016)
Equity in earnings of unconsolidated affiliates (833) (616)
Change in assets and liabilities:
Accounts receivable, net (585) (1,305)
Inventories (5,326) (1,912)
Prepaid expenses 93 (1,290)
Other assets 399 210
Accounts payable and accrued liabilities 8,445 5,998
Income taxes payable 618 657
Other noncurrent liabilities (65) 45
Minority interests (79) 52
----------------- -----------------
Net cash provided by operating activities 13,683 12,003
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (4,759) (10,164)
Proceeds from disposals of property, plant and equip 53 14
Investment by joint venture partner 0 2,323
Proceeds from sale of marketable securities 1,183 1,310
Collection of notes receivable 18 32
Due to affiliates 594 (134)
Increase in marketable securities (2) (77)
----------------- -----------------
Net cash used in investing activities (2,913) (6,696)
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term debt (2,279) (4,395)
Additions to long-term debt 412 311
Repayments of long-term debt (894) (1,459)
Dividends paid (3,150) (2,853)
Repurchases of common stock (415) (797)
Sales of common stock 185 24
----------------- -----------------
Net cash used in financing activities (6,141) (9,169)
----------------- -----------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIV (109) (4)
----------------- -----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,520 (3,866)
CASH AND CASH EQUIVALENTS, beginning of period 7,040 7,390
----------------- -----------------
CASH AND CASH EQUIVALENTS, end of period $11,560 $3,524
================= =================
CASH PAID DURING THE PERIOD FOR:
Interest $541 $1,033
================= =================
Income taxes $4,330 $3,846
================= =================
</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
(Amounts in thousands, except per share amounts)
(Unaudited)
1. Basis for Preparation of the Consolidated Financial Statements
The consolidated financial statements have been prepared by Riviana
Foods Inc. and subsidiaries ("the Company"), without audit, with the exception
of the June 29, 1997, 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 29, 1997.
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------ ------------------------------------
DECEMBER 28, 1997 DECEMBER 29, 1996 DECEMBER 29, 1997 DECEMBER 29, 1996
----------------- ----------------- ----------------- -----------------
Basic 15,751 15,821 15,752 15,839
Stock options 210 104 195 98
------ ------ ------ ------
Diluted 15,961 15,925 15,947 15,937
====== ====== ====== ======
</TABLE>
3. Inventories
Inventories were composed of the following:
DECEMBER 28, 1997 JUNE 29, 1997
----------------- -------------
Raw materials $15,466 $ 8,555
Work in process 15 31
Finished goods 31,385 33,130
Packaging supplies 6,485 6,738
------- -------
Total $53,351 $48,454
======= =======
4. Recently Issued Accounting Standard
SFAS No. 130, "Reporting Comprehensive Income," was issued in June
1997. The Company will adopt SFAS No. 130 in the first quarter of Fiscal 1999.
Had SFAS No. 130 been adopted as of December 28, 1997, net income, as reported,
would have been adjusted by changes during the reporting period in unrealized
gains on marketable securities, net of taxes, and cumulative foreign currency
translation adjustment.
4
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
THREE MONTHS ENDED DECEMBER 28, 1997 COMPARED TO THREE MONTHS ENDED DECEMBER
29, 1996
For the three months ended December 28, 1997, sales increased $2.7 million, or
2.3%, to $121.5 million from $118.8 million recorded for the same period last
year. Volume gains accounted for $6.1 million of the consolidated increase in
sales. A combination of price and product mix decreased sales $2.0 million and
unfavorable foreign currency translation reduced sales by $1.4 million. Domestic
sales of $75.9 million increased $4.4 million, or 6.2%, from the prior year
sales of $71.5 million. In the prior fiscal year, the Company entered into a
joint venture with a major rice milling company in Arkansas, which began
operations in the last fiscal quarter of the prior year. The joint venture is
involved in the cogeneration of steam and electricity using rice hulls as fuel.
This venture added $0.7 million to sales in the current year. In the domestic
rice business, the retail sector recorded a $5.1 million, or 9.8%, increase in
sales. Within the retail sector, sales of regular rice increased by $2.5
million, or 9.8%, due primarily to a volume increase of 14.4%. Sales of
value-added products increased by $2.1 million and sales of brown rice increased
by $0.5 million. In the non-retail sector, sales decreased $1.4 million, or
7.0%. Sales decreased $2.4 million, or 16.0%, in the export/commodity category,
whereas higher sales were recorded in the foodservice ($0.6 million) and the
industrial ($0.4 million) categories. Sales in Central America increased $1.0
million, or 4.8%, to $20.6 million compared to $19.6 million in the prior year.
Higher volumes were recorded in both the fruit nectar and juice products and
cookie and cracker product lines. In total, higher volumes increased sales by
$1.1 million. Higher prices, particularly in the cookie and cracker product
lines, increased sales by $1.4 million and unfavorable currency translation
reduced sales by $1.5 million. In Europe, sales declined by $2.7 million, or
9.8%, to $25.0 million from $27.7 million last year. Lower unit volumes
decreased sales by $0.8 million as the Company continued to eliminate sales of
certain lower margin products. A combination of price and product mix reduced
sales by $2.0 million and favorable currency translation increased sales by $0.1
million.
Gross profit increased $3.4 million, or 10.1%, to $37.0 million from $33.6
million a year ago. As a percentage of sales, gross profit increased to 30.5%
from 28.3%. Increased unit sales in the domestic rice business particularly in
the value added products resulted in a $1.9 million increase in the domestic
unit gross profit. The gross profit for the Company's Central American
operations increased 21.0% to $6.7 million primarily due to the increased unit
volumes and lower raw material costs and improved operating efficiencies. In
Europe, gross profit increased $0.4 million, or 17.9%, due to the shift in sales
to higher margin products.
Income from operations increased $0.4 million, or 5.0%, to $8.7 million from
$8.3 million in the same period last year. As a percentage of sales, operating
income increased to 7.2% from 7.0% in the prior period. The increase in
operating income was principally due to improved results in both Central
American and European operations. In Central America, operating income increased
by $0.7 million, or 26.9%, to $3.1 million due to the increase in unit sales and
the resulting increase in gross profit. Operating income for European operations
increased by $0.4 million, or 69.0%, to $1.0 million from $0.6 million in the
same period last year as a result of the
5
<PAGE>
improvement in gross margin as discussed previously. In the domestic rice
business, operating income declined by $0.7 million due to an increase in
promotional spending which more than offset the increase in gross profit. The
increase in promotional spending was associated with competitive market
conditions in the value added product lines.
Other income increased $0.2 million to $0.5 million. Gains from the sale of
marketable securities decreased $0.8 million. Net interest expense was lower by
$0.4 million mostly due to improved working capital management in Central
America that reduced borrowing requirements and lower interest rates. Equity in
earnings of unconsolidated affiliates increased by $0.3 million. Other
miscellaneous expenses were $0.3 million lower.
The effective tax rate for the second quarter decreased to 30.0% from 32.6% in
the prior year. This decrease in the rate reflected energy tax credits related
to the Company's cogeneration joint venture and Central American investment tax
credits.
The Company periodically reviews estimated useful lives of property, plant and
equipment. Based on the most recent review, the Company determined that actual
lives for certain machinery and equipment were generally longer than the useful
lives for depreciation purposes. Therefore the Company extended the estimated
useful lives of those assets from 10 to 15 years, effective June 30, 1997. This
change in estimate reduced depreciation expense for the three months ended
December 28, 1997 by $0.4 million and increased net income by $0.3 million, and
basic earnings per share by $0.02.
Net income for the current quarter was $6.4 million compared to $5.8 million for
the same quarter last year and basic earnings per share were $0.41, up from
$0.37.
SIX MONTHS ENDED DECEMBER 28, 1997 COMPARED TO SIX MONTHS ENDED DECEMBER 29,
1996
Sales increased $5.7 million, or 2.5%, to $229.5 million in the six-month period
ended December 28,1997 versus $223.8 million for the same period of the previous
year. Domestic sales increased by $8.6 million, or 6.5%, to $139.3 million while
sales from international operations decreased by $2.9 million to $90.2 million.
Increased volumes added $8.8 million to sales while a combination of price and
sales mix decreased sales by $1.7 million. Unfavorable currency translation
reduced sales by $1.4 million. In the prior fiscal year, the Company entered
into a joint venture with a major rice milling company in Arkansas, which began
operations in the last fiscal quarter. The joint venture is involved in the
cogeneration of steam and electricity using rice hulls as fuel. This venture
added $1.1 million to sales in the current year. In the domestic rice business,
sales in the retail category increased by $5.5 million, or 5.6%. Unit volume
sales of the higher-margin instant and prepared rice mixes increased by 2.1%. Of
the total $5.5 million increase in sales in the retail category, $6.7 million
was related to increased volumes and a combination of product mix and selling
price reduced sales $1.2 million. In the non-retail category that includes the
lower-margin regular rice sales to the foodservice, industrial and export
sectors, sales increased by $2.0 million. Increased volumes accounted for $2.6
million and lower pricing and product mix reduced sales $0.6 million. Sales by
the Company's Central American operations increased $2.8 million, or 7.6%, to
$39.5 million. Increased sales volumes in both cookie and cracker products and
fruit juice and nectar products added $2.4 million to
6
<PAGE>
sales. Higher prices added $3.0 million to sales and unfavorable currency
translation reduced sales by $2.6 million. Sales by the Company's European
operations decreased $5.7 million, or 10.0%, to $50.7 million. Volumes were
affected by product line rationalization and lower unit volumes decreased sales
by $4.0 million. Lower prices reduced sales by $2.9 million and favorable
foreign currency exchange increased sales $1.2 million.
Gross profit increased by $4.2 million, or 7.0%, to $64.4 million in the
six-month period from $60.2 million in the same period of the previous year. As
a percentage of sales, gross profit increased to 28.0% of sales in the current
period versus 26.9% of sales last year. Of the total $4.2 million increase in
gross profit, $1.1 million came from domestic operations and $3.1 million came
from international operations. Domestic gross profit increased primarily due to
increased unit volumes and sales mix. In Central America, gross profit increased
by $2.4 million due to the increased sales, lower raw material costs and
increased operating efficiencies. As a percentage of sales, gross profit in
Central America increased to 31.6% from 27.6%. European operations increased
gross profit by $0.7 million, or 16.2%, due to increased sales of higher margin
products.
Income from operations increased by 4.2% to $14.0 million from $13.5 million
last year. As a percentage of sales, operating income increased to 6.1% from
6.0%. Domestic operating income decreased $1.3 million, or 16.4%, to $6.7
million. In the domestic rice business, increased promotional spending due to
competitive market conditions particularly in the value added product segment
more than offset the increase in gross profit. International income from
operations increased $1.8 million. In Central America operating income was up
$1.1 million primarily as a result of the increase in gross margin attributable
to the increase in sales and reduction in costs discussed above. In Europe,
operating income was up $0.7 million due to the improvement in margins as
discussed above.
Other income increased $1.2 million to $1.4 million from $0.2 million in the
prior year. Net interest expense was $0.8 million lower in the current year.
Decreased working capital requirements, primarily in Central America, reduced
borrowings and interest rates were lower. Equity in earnings of unconsolidated
affiliates increased by $0.2 million to $0.8 million. Increased royalty income
reduced other miscellaneous expenses by $0.2 million.
Tax expense increased $0.4 million to $4.9 million in the current year. The
effective tax rate was 31.9% in the current period as compared to 33.0% in the
same period last year. The lower rate in the current period results from a lower
effective tax rate in Central America which is being impacted by the utilization
of investment tax credits and energy tax credits from the Company's energy
cogeneration joint venture.
The Company periodically reviews estimated useful lives of property, plant and
equipment. Based on the most recent review, the Company determined that actual
lives for certain machinery and equipment were generally longer than the useful
lives for depreciation purposes. Therefore the Company extended the estimated
useful lives of those assets from 10 to 15 years, effective June 30, 1997. This
change in estimate reduced depreciation expense for the six months ended
December 28, 1997 by $0.8 million and increased net income by $0.5 million, and
basic earnings per share by $0.03.
Net income for the six-month period was $10.3 million, up 14.6%, compared to
$9.0 million for the comparable period last year. Basic earnings per share were
$0.66 versus $0.57 last year.
7
<PAGE>
Liquidity and Capital Resources
Cash provided by operating activities totaled $13.7 million for the six months
ended December 28, 1997, which was an increase of $1.7 million from the same
period last year. The increase in cash provided by operations was related to the
increase in net income and reduced working capital requirements.
Cash used in investing activities decreased to $2.9 million from $6.7 million in
the same period in the prior year. Purchases of property, plant and equipment
totaled $4.8 million, which was $5.4 million less than purchases in the same
period last year. In the prior year, capital expenditures were made for a
consolidated joint venture with Riceland Foods to construct power-generating
facilities in Arkansas using rice hulls as fuel. Cash flow related to amounts
due to affiliates increased by $0.7 million from the period ended December 29,
1996. Proceeds from the sale of marketable securities decreased by $0.1 million.
Cash used in financing activities totaled $6.1 million in the six months ended
December 28, 1997, which was $3.0 million less than last year. In the current
period $2.7 million net was applied to repay both short and long-term debt
whereas in the prior year $5.5 million was used to repay debt. Dividend payments
in the period ended December 28, 1997 were $3.2 million, up from $2.9 million
paid in the same period last year.
On October 22, 1997 the Company's board of directors raised the quarterly
dividend on the Company's common stock to $0.11 per share from $0.10 per share,
for an indicated annual rate of $0.44 per share.
The Company's financial position continues to remain 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
sufficient capital resources and liquidity to meet its needs.
Other Matters - 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
8
<PAGE>
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
communicates electronically. However, there can be no guarantee that the systems
of other companies will be converted timely. A failure to convert by another
company 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.
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 on 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 January 22,
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: February 6, 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 January 22, 1998, 13
regarding unaudited financial statements
12
EXHIBIT 15
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 December 28, 1997, and the
related consolidated statements of income for the three-month periods ended
December 28, 1997, and December 29, 1996, and the related consolidated
statements of income and cash flows for the six-month periods ended December 28,
1997 and December 29, 1996. 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
January 22, 1998
13
<PAGE>
January 22, 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, and its Form S-3 Registration Statement, its Form
10-Q for the quarter ended December 28, 1997, which includes our report dated
January 22, 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 Second Quarter Form 10Q for Fiscal 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1998
<PERIOD-END> DEC-28-1997
<CASH> 5,417
<SECURITIES> 4,459
<RECEIVABLES> 43,750
<ALLOWANCES> 597
<INVENTORY> 53,351
<CURRENT-ASSETS> 115,278
<PP&E> 110,910
<DEPRECIATION> 39,743
<TOTAL-ASSETS> 203,444
<CURRENT-LIABILITIES> 52,988
<BONDS> 0
0
0
<COMMON> 15,883
<OTHER-SE> 116,895
<TOTAL-LIABILITY-AND-EQUITY> 203,444
<SALES> 229,486
<TOTAL-REVENUES> 229,486
<CGS> 165,117
<TOTAL-COSTS> 50,345
<OTHER-EXPENSES> 1,392
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (533)
<INCOME-PRETAX> 15,416
<INCOME-TAX> 4,912
<INCOME-CONTINUING> 10,332
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 10,332
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.65
</TABLE>
