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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 26, 1999
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
incorporation or organization) Identification No.)
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, 1999, was 14,582,559.
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<PAGE>
RIVIANA FOODS INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 26, 1999
INDEX
PAGE
----
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at September 26, 1999 and June 27,
1999...........................................................1
Consolidated Statements of Income for the Three Months
Ended September 26, 1999 and September 27, 1998...............2
Consolidated Statements of Cash Flows for the Three Months Ended
September 26, 1999 and September 27, 1998.....................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............................11
Signature...................................................................12
Exhibit Index...............................................................13
<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>
SEPTEMBER JUNE
26, 1999 27 ,1999
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ......................................................................... $ 4,661 $ 5,605
Cash equivalents ............................................................. 8,173 5,729
Marketable securities ........................................................ 2,913 3,366
Accounts receivable, less allowance for doubtful accounts of $1,420 and $1,386 42,681 42,079
Inventories .................................................................. 46,620 46,570
Prepaid expenses ............................................................. 2,823 2,247
--------- ---------
Total current assets ................................................. 107,871 105,596
PROPERTY, PLANT AND EQUIPMENT:
Land ......................................................................... 3,498 3,504
Buildings .................................................................... 26,892 26,853
Machinery and equipment ...................................................... 93,376 91,557
--------- ---------
Property, plant and equipment, gross ..................................... 123,766 121,914
Less accumulated depreciation ................................................ (45,741) (44,579)
--------- ---------
Property, plant and equipment, net ....................................... 78,025 77,335
INVESTMENTS IN UNCONSOLIDATED AFFILIATES ....................................... 10,162 9,958
OTHER ASSETS ................................................................... 7,890 7,315
========= =========
Total assets ..................................................... $ 203,948 $ 200,204
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt .............................................................. $ 854 $ 970
Current maturities of long-term debt ......................................... 1,060 1,003
Accounts payable ............................................................. 27,245 24,893
Accrued liabilities .......................................................... 18,164 18,870
Income taxes payable ......................................................... 8,947 6,938
--------- ---------
Total current liabilities ................................................ 56,270 52,674
LONG-TERM DEBT, net of current maturities ...................................... 1,487 1,390
DUE TO AFFILIATES .............................................................. 713 506
DEFERRED INCOME TAXES .......................................................... 5,262 5,809
OTHER NONCURRENT LIABILITIES ................................................... 2,800 2,964
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS ............................................................. 6,247 6,484
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 .............................................................. 6,534 6,519
Retained earnings ............................................................ 145,237 142,424
Accumulated other comprehensive income ....................................... (10,561) (9,606)
Treasury stock, at cost, 1,293 and 1,237 shares .............................. (25,924) (24,843)
--------- ---------
Total stockholders' equity ........................................... 131,169 130,377
--------- ---------
Total liabilities and stockholders' equity ........................... $ 203,948 $ 200,204
========= =========
</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)
THREE MONTHS ENDED
--------- ---------
SEPTEMBER SEPTEMBER
26, 1999 27, 1998
--------- ---------
NET SALES ............................................ $ 105,607 $ 107,322
COST OF SALES ........................................ 74,999 79,433
--------- ---------
Gross profit ..................................... 30,608 27,889
--------- ---------
COSTS AND EXPENSES:
Advertising, selling and warehousing ............... 18,906 16,969
Administrative and general ......................... 5,486 5,311
--------- ---------
Total costs and expenses ......................... 24,392 22,280
--------- ---------
Income from operations ........................... 6,216 5,609
OTHER INCOME (EXPENSE):
Gain on sale of marketable securities .............. 405
Interest income .................................... 367 349
Interest expense ................................... (203) (192)
Equity in earnings of unconsolidated affiliates .... 203 121
Other income (expense), net ........................ (277) 573
--------- ---------
Total other income ............................... 495 851
--------- ---------
Income before income taxes and
minority interests ............................ 6,711 6,460
INCOME TAX EXPENSE ................................... 2,013 1,955
MINORITY INTERESTS IN EARNINGS OF
CONSOLIDATED SUBSIDIARIES ........................ 54 104
========= =========
NET INCOME ....................................... $ 4,644 $ 4,401
========= =========
Earnings per share:
Basic ........................................ $ 0.32 $ 0.28
Diluted ...................................... 0.31 0.28
Weighted average common shares outstanding:
Basic ....................................... 14,627 15,491
Diluted ..................................... 14,783 15,713
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 SEPTEMBER
26, 1999 27, 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................ $ 4,644 $ 4,401
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ......................... 1,501 1,368
Deferred income taxes ................................. (403) (451)
Gain on disposition of assets ......................... (405) (7)
Equity in earnings of unconsolidated affiliates ....... (203) (121)
Change in assets and liabilities:
Accounts receivable, net .......................... (562) (683)
Inventories ....................................... (346) (734)
Prepaid expenses .................................. (585) (470)
Other assets ...................................... (632) 615
Accounts payable and accrued liabilities .......... 1,512 7,864
Income taxes payable .............................. 2,027 1,399
Other noncurrent liabilities ...................... (113) 17
Minority interests ................................ (215) (159)
--------- ---------
Net cash provided by operating activities ....... 6,220 13,039
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ................ (2,516) (1,990)
Proceeds from disposals of property, plant and equipment .. 7
Proceeds from sale of marketable securities ............... 438
Increase (decrease) in due to affiliates .................. 176 (935)
Increase in marketable securities ......................... (1)
Other ..................................................... 11 9
--------- ---------
Net cash used in investing activities ........... (1,891) (2,910)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term debt .................... (26)
Additions to long-term debt ............................... 467 426
Repayments of long-term debt .............................. (313) (479)
Dividends paid ............................................ (1,830) (1,721)
Repurchases of common stock ............................... (1,109) (13,311)
Sales of common stock ..................................... 23 69
Collection of employee discount on stock .................. 15
--------- ---------
Net cash used in financing activities ........... (2,747) (15,042)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS .......................................... (82) (20)
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .............. 1,500 (4,933)
CASH AND CASH EQUIVALENTS, beginning of period ................ 11,334 17,197
========= =========
CASH AND CASH EQUIVALENTS, end of period ...................... $ 12,834 $ 12,264
========= =========
CASH PAID DURING THE PERIOD FOR:
Interest .................................................. $ 208 $ 193
Income taxes .............................................. 600 306
</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 27, 1999, 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 27, 1999.
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 26, 1999 SEPTEMBER 27, 1998
------------------ -------------------
Weighted average common shares outstanding:
Basic 14,627 15,491
Stock options 156 222
------ ------
Diluted 14,783 15,713
====== ======
In the calculation of diluted shares, 364 and 8 anti-dilutive stock
option shares have been excluded for the three months ended September 26, 1999,
and September 27, 1998.
3. Inventories
Inventories were composed of the following:
SEPTEMBER 26, 1999 JUNE 27, 1999
------------------ -------------
Raw materials $12,743 $ 8,994
Work in process 47 29
Finished goods 27,668 31,785
Packaging supplies 6,162 5,762
------- -------
Total $46,620 $46,570
======= =======
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 26, 1999 SEPTEMBER 27, 1998
------------------ -------------------
Net income $4,644 $4,401
Other comprehensive income:
Unrealized gains (losses)
on marketable securities,
net of tax:
Unrealized gains (losses) (10) (96)
Realized (gains) reclassified
to net income (263)
Foreign currency
translation adjustment (682) 87
------- -------
Total comprehensive income $3,689 $4,392
======= =======
5. Segment Information
THREE MONTHS ENDED
-------------------------------------------
SEPTEMBER 26, 1999 SEPTEMBER 27, 1998
------------------ -------------------
Net sales:
Domestic $ 65,524 $ 63,898
Europe 21,024 23,451
Central America 19,059 19,973
--------- ---------
Total consolidated $105,607 $107,322
========= =========
Income:
Operating income:
Domestic $ 6,183 $ 5,254
Europe 523 690
Central America 2,105 2,158
--------- ---------
Total operating income 8,811 8,102
General corporate expenses (2,595) (2,493)
--------- ---------
Income from operations 6,216 5,609
Interest expense (203) (192)
Equity in earnings of
unconsolidated affiliates 203 121
Other income, net 495 922
--------- --------
Income before income taxes
and minority interests $ 6,711 $ 6,460
========= ========
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THREE MONTHS ENDED SEPTEMBER 26, 1999 AND SEPTEMBER 27, 1998
RESULTS OF OPERATIONS
For the three months ended September 26, 1999, sales decreased $1.7 million or
1.6% to $105.6 million from $107.3 million recorded for the same period last
year. Volume gains accounted for an increase of $2.7 million. A combination of
price and product mix decreased sales $0.9 million and unfavorable foreign
currency translation reduced sales by $3.5 million. Domestic rice sales of $64.6
million increased $1.3 million or 2.1% from the prior year sales of $63.3
million. In the domestic rice business, the retail sector recorded a $1.9
million or 4.3% increase in sales. Within the retail sector, sales of regular
rice increased by $1.9 million or 8.5% primarily due to a unit volume increase
of 11.7%. Sales of value-added products decreased by $0.1 million and sales of
brown rice increased by $0.1 million. In the non-retail sector, sales decreased
$0.6 million or 3.5%. Other sales, excluding by-products, decreased by $0.9
million or 7.8% primarily due to an 86.6% decrease in commodity unit volume
sales. Sales in the foodservice category increased $0.4 million or 17.8% due to
a 20.0% increase in unit volumes. Industrial and by-product sales decreased $0.1
million from the prior year. Sales from the Company's energy co-generation joint
venture increased by $0.3 million. Higher volumes added $0.2 million and
increased prices added $0.1 million. Sales in Central America decreased $0.9
million or 4.6% to $19.1 million compared to $20.0 million in the prior year.
Higher volumes were recorded in fruit nectars and juices and were even in the
cookie and cracker product lines. In total, higher volumes increased sales by
$0.2 million. Higher prices increased sales by $1.7 million and unfavorable
currency translation reduced sales by $2.8 million. In Europe, sales declined by
$2.4 million or 10.4% to $21.0 million from $23.4 million last year. Lower unit
volumes decreased sales by $0.9 million and a combination of lower selling
prices and product mix reduced sales by $0.8 million. Unfavorable currency
translation decreased sales by $0.7 million.
Gross profit increased $2.7 million or 9.8% to $30.6 million from $27.9
million a year ago. Gross profit as a percentage of sales increased to 29.0%
from 26.0% in the corresponding period last year. In the domestic rice business
gross profit increased $2.7 million or 14.0 % to $22.0 million. As a percentage
of sales gross profit improved to 34.1% from 30.5% 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 3.9% to $6.2
million. The increase in gross profit was related to improved gross profit
margins on cookie and cracker product sales. As a percentage of sales, in
Central America, gross profit increased to 32.7% from 30.1% last year. In
Europe, the gross profit was even with last year but increased as a percentage
of sales to 11.5% from 10.6% 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 $0.6 million or 10.8% to $6.2 million from $5.6
million for the same period last year. As a percentage of sales, operating
income was 5.9%, up from 5.2% last year. In the domestic segment, operating
income increased by $0.9 million to $6.2 million from $5.3 million last year.
The increase in operating income in the domestic segment resulted
6
<PAGE>
from the increase in gross profit addressed previously. In Central America,
operating income decreased by $0.1 million or 2.5% to $2.1 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 income decreased $0.2 million to
$0.5 million and as a percentage of sales to 2.5% from 2.9% last year as a
result of the improved margins offset by higher selling and promotion expenses.
The Company reported net interest income of $0.2 million for the quarter
ended September 26, 1999, which was even with the same quarter in the prior
year.
Other income, excluding interest, decreased from the previous year by $0.4
million to $0.3 million from $0.7 million. Gains from the sale of marketable
securities and equity in earnings of unconsolidated affiliates increased by $0.4
million and $0.1 million respectively. Other miscellaneous income decreased by
$0.9 million primarily due to the settlement of litigation recognized in the
prior year.
Income tax expense remained constant at $2.0 million and the effective
rate decreased to 30.0% from 30.3%. This slight decrease in the rate reflected
the utilization of energy tax credits associated with the Company's
co-generation joint venture and a minor reduction in foreign source income taxed
at higher rates.
Net income for the current quarter increased $0.2 million or 5.5% to
$4.6 million from $4.4 million in the same period last year. Diluted
earnings per share were $0.31 compared to $0.28.
LIQUIDITY AND FINANCIAL POSITION
Cash provided by operating activities decreased by $6.8 million to $6.2
million for the quarter ended September 26, 1999. Net income increased by $0.2
million and depreciation and amortization charges increased by $0.1 million.
Cash flow from equity in earnings of unconsolidated affiliates decreased by $0.1
million and gain from the sale of marketable securities increased by $0.4
million. Cash invested in working capital increased $5.3 million. An increase in
other assets, primarily brand licensing fees, used $0.6 million in the current
year versus, in the prior year, dividends received from unconsolidated
affiliates was a $0.6 million source of cash.
Cash used in investing activities decreased $1.0 million to $1.9 million
as compared to cash used in investing activities in the prior year of $2.9
million. Additions to property, plant and equipment in the current quarter
totaled $2.5 million, an increase of $0.5 million from the comparable period
last year. There was also an increase in amounts due to affiliates of $0.2
million whereas in the prior year amounts due to affiliates decreased by $0.9
million. Proceeds from the sale of marketable securities increased $0.4 million.
Cash used in financing activities decreased by $12.3 million in the
quarter ended September 26, 1999 to $2.7 million. In the current year the
Company had a net increase in short and long-term debt of $0.2 million compared
to a net reduction of $0.1 million in the same
7
<PAGE>
period last year. Funds used for dividend payments increased by $0.1 million
and, during the quarter ended September 26, 1999, 57.5 thousand shares of the
Company's common stock were repurchased at a cost of $1.1 million. In the same
period last year, the Company repurchased 671.0 thousand shares of the Company's
common stock at a cost of $13.3 million.
On October 20, 1999 the Company's board of directors raised the quarterly
dividend on the Company's common stock to $0.14 per share from $0.125 per share,
for an indicated annual rate of $0.56 per share.
As of September 26, 1999, the board of directors of the Company had
authorized the open-market repurchase, from time to time, of up to 2.0 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 26, 1999, the Company spent
$1.1 million to repurchase 57.5 thousand shares at an average price of $19.28
per share. Through September 26, 1999 the Company has repurchased a total of 1.4
million shares and 127.9 thousand shares have been reissued upon exercise of
employee stock options.
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.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company utilizes derivative financial instruments as hedges to manage
a portion of its exposure to fluctuations in rice costs, packaging material
costs and exchange rates related to inventory purchases denominated in foreign
currencies. These instruments qualify for hedge accounting treatment and,
accordingly, gains and losses on these instruments are deferred and included in
the basis of the inventory hedged. The Company utilizes rough rice futures
contracts, packaging material swap contracts and forward currency exchange
contracts to hedge specific purchase commitments The contracts have varying
maturities with none exceeding twelve months and are settled at maturity, based
on prices agreed to at the inception of the contracts. As a matter of policy,
the Company does not engage in speculative activity and does not hedge to
protect the translated results of foreign operations or other speculative
activity and does not hedge to protect the translated results of foreign
operations or other economic exposures for which speculative accounting
treatment of the hedging instrument would by required.
8
<PAGE>
The information below presents the Company's rough rice futures positions
outstanding as of September 26, 1999 at which time a loss of $1.4 million was
deferred. All other derivative financial instruments are not material as of
September 26, 1999.
Expected Maturity
Fiscal 2000
-----------
Future contracts (long positions):
Contract volumes (cwt) 600,000
Weighted average contract price (per cwt) $ 8.22
Contract amount $4,932,000
Weight average fair value (per cwt) $ 5.96
Fair value $3,576,000
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 total project costs are
presently estimated not to exceed $1.0 million, of which $0.7 million has been
expended through September 26, 1999, and will be expensed as incurred, unless
new software is purchased which costs will be capitalized. The Company's
reprogramming and testing efforts have been substantially completed. The Company
expects that all critical systems will be ready prior to November 30, 1999.
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
9
<PAGE>
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.
FORWARD LOOKING STATEMENTS
Certain statements made in this Form 10-Q which are not historical in
nature are "forward-looking statements" and may involve risks and uncertainties
which could cause actual future results to differ materially and adversely from
those statements. The factors that could adversely affect the Company's business
include, among others:
Fluctuations in domestic and foreign rice prices, which may be caused by
changes in U. S. government farm support programs, changes in international
agricultural and trading policies and weather conditions in the world's major
rice growing regions;
Political, economic and other risks associated with the Company's international
operations, including exposure to currency rate fluctuations, currency exchange
restrictions, potentially unfavorable changes in tax or other laws, partial or
total expropriation and risks of war, terrorism an other civil disturbances; and
The Company's ability to maintain consumer loyalty, and to compete in the
domestic rice market against the Company's competitors who may have greater
financial resources and in the international rice markets against local and
multinational companies.
For additional information about factors that could affect the Company's
business, see the documents that the Company files with the Securities and
Exchange Commission from time to time.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 15, Letters from Arthur Andersen LLP dated October 19,
1999, regarding unaudited financial statements.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
11
<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 2, 1999 By: /s/ E. WAYNE RAY, JR.
E. Wayne Ray, Jr.
Vice President, Chief Financial
Officer and Chief Accounting Officer
12
<PAGE>
EXHIBIT INDEX
SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- --- ----------- -----------
15 Letters from Arthur Andersen LLP dated October 19, 1999, 14
regarding unaudited financial statements
13
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 September 26, 1999, and the
related consolidated statements of income for the three-month periods ended
September 26, 1999 and September 27, 1998, and cash flows for the three-month
periods ended September 26, 1999 and September 27, 1998. 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 19, 1999
<PAGE>
October 19, 1999
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 26, 1999,
which includes our report dated October 19, 1999, 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
<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 2000 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> JUL-02-2000
<PERIOD-END> SEP-26-1999
<CASH> 4,661
<SECURITIES> 2,913
<RECEIVABLES> 42,681
<ALLOWANCES> 1,420
<INVENTORY> 46,620
<CURRENT-ASSETS> 107,871
<PP&E> 123,766
<DEPRECIATION> 45,741
<TOTAL-ASSETS> 203,948
<CURRENT-LIABILITIES> 56,270
<BONDS> 0
0
0
<COMMON> 15,883
<OTHER-SE> 115,286
<TOTAL-LIABILITY-AND-EQUITY> 203,948
<SALES> 105,607
<TOTAL-REVENUES> 105,607
<CGS> 74,999
<TOTAL-COSTS> 24,392
<OTHER-EXPENSES> 495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (203)
<INCOME-PRETAX> 6,711
<INCOME-TAX> 2,013
<INCOME-CONTINUING> 4,644
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,644
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.31
</TABLE>
