<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
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 October 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------ -----
Commission File Number 0-25294
----------
RIVIANA FOODS INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0177572
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2777 ALLEN PARKWAY
HOUSTON, TX 77019
(Address of principal executive offices) (Zip Code)
</TABLE>
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 31, 2000, was 14,106,463.
================================================================================
<PAGE> 2
RIVIANA FOODS INC.
FORM 10-Q FOR THE QUARTER ENDED OCTOBER 1, 2000
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I -- Financial Information
Item 1 -- Financial Statements
Consolidated Balance Sheets at October 1, 2000 and July 2, 2000.................................1
Consolidated Statements of Income for the Three Months
Ended October 1, 2000 and September 26, 1999.................................................2
Consolidated Statements of Cash Flows for the Three Months Ended
October 1, 2000 and September 26, 1999.......................................................3
Notes to Consolidated Financial Statements......................................................4
Item 2 -- Management's Discussion and Analysis of Financial Condition and Results
of Operations.............................................................................7
Part II -- Other Information
Item 6-- Exhibits and Reports on Form 8-K...............................................................10
Signature........................................................................................................11
Exhibit Index....................................................................................................12
</TABLE>
<PAGE> 3
Part I -- Financial Information
Item 1 -- Financial Statements
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
OCTOBER 1, 2000 JULY 2, 2000
--------------- ------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash ............................................................................ $ 4,183 $ 7,414
Cash equivalents ................................................................ 6,518 6,114
Marketable securities ........................................................... 1,226 1,582
Accounts receivable, less allowance for doubtful accounts of $1,233 and $1,032 .. 44,075 40,826
Inventories ..................................................................... 53,308 48,923
Prepaid expenses ................................................................ 3,322 2,366
------------ ------------
Total current assets .................................................... 112,632 107,225
PROPERTY, PLANT AND EQUIPMENT:
Land ............................................................................ 3,592 3,593
Buildings ....................................................................... 30,928 31,394
Machinery and equipment ......................................................... 107,269 105,048
------------ ------------
Property, plant and equipment, gross ........................................ 141,789 140,035
Less accumulated depreciation ................................................... (55,427) (53,911)
------------ ------------
Property, plant and equipment, net .......................................... 86,362 86,124
DUE FROM AFFILIATES ............................................................... 391
INVESTMENTS IN UNCONSOLIDATED AFFILIATES .......................................... 8,738 9,402
OTHER ASSETS ...................................................................... 6,290 6,364
------------ ------------
Total assets ........................................................ $ 214,413 $ 209,115
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt ................................................................. $ 3,907 $ 4,997
Current maturities of long-term debt ............................................ 921 903
Accounts payable ................................................................ 26,848 24,906
Accrued liabilities ............................................................. 23,649 21,110
Income taxes payable ............................................................ 7,690 5,876
------------ ------------
Total current liabilities ................................................... 63,015 57,792
LONG-TERM DEBT, net of current maturities ......................................... 1,565 1,462
DUE TO AFFILIATES ................................................................. 802
DEFERRED INCOME TAXES ............................................................. 4,251 4,977
OTHER NONCURRENT LIABILITIES ...................................................... 2,744 2,716
COMMITMENTS AND CONTINGENCIES
MINORITY INTERESTS ................................................................ 6,240 6,435
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 ................................................................. 6,590 6,553
Retained earnings ............................................................... 162,389 159,620
Accumulated other comprehensive income .......................................... (14,366) (13,214)
Treasury stock, at cost, 1,761 and 1,762 shares ................................. (33,898) (33,911)
------------ ------------
Total stockholders' equity .............................................. 136,598 134,931
------------ ------------
Total liabilities and stockholders' equity .............................. $ 214,413 $ 209,115
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 4
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------
OCTOBER 1, 2000 SEPTEMBER 26, 1999
---------------- ------------------
<S> <C> <C>
NET SALES ................................................. $ 101,528 $ 105,607
COST OF SALES ............................................. 69,695 74,999
--------- ---------
Gross profit .......................................... 31,833 30,608
--------- ---------
COSTS AND EXPENSES:
Advertising, selling and warehousing .................... 19,525 18,906
Administrative and general .............................. 5,668 5,486
--------- ---------
Total costs and expenses .............................. 25,193 24,392
--------- ---------
Income from operations ................................ 6,640 6,216
OTHER INCOME (EXPENSE):
Gain on sale of marketable securities ................... 505 405
Interest income ......................................... 292 367
Interest expense ........................................ (313) (203)
Equity in earnings of unconsolidated affiliates ......... 288 203
Other (expense), net .................................... (424) (277)
--------- ---------
Total other income .................................... 348 495
--------- ---------
Income before income taxes and
minority interests ................................. 6,988 6,711
INCOME TAX EXPENSE ........................................ 2,096 2,013
MINORITY INTERESTS IN EARNINGS OF
CONSOLIDATED SUBSIDIARIES ............................. 104 54
--------- ---------
NET INCOME ............................................ $ 4,788 $ 4,644
========= =========
Earnings per share:
Basic ............................................. $ 0.34 $ 0.32
Diluted ........................................... 0.34 0.31
Weighted average common shares outstanding:
Basic ............................................ 14,125 14,627
Diluted .......................................... 14,197 14,783
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE> 5
RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------
October 1, 2000 September 26, 1999
----------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................ $ 4,788 $ 4,644
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ........................ 1,685 1,501
Deferred income taxes ................................ (598) (403)
Gain on disposition of assets ........................ (532) (405)
Equity in earnings of unconsolidated affiliates ...... (288) (203)
Change in assets and liabilities:
Accounts receivable, net ........................ (3,593) (562)
Inventories ..................................... (4,452) (346)
Prepaid expenses ................................ (979) (585)
Other assets .................................... 417 (632)
Accounts payable and accrued liabilities ........ 4,826 1,512
Income taxes payable ............................ 1,836 2,027
Other noncurrent liabilities .................... 32 (113)
Minority interests .............................. (178) (215)
-------- --------
Net cash provided by operating activities ..... 2,964 6,220
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ................ (2,085) (2,516)
Proceeds from disposals of property, plant and equipment .. 33
Proceeds from sale of marketable securities ............... 525 438
Increase (decrease) in due to/from affiliates, net ........ (1,145) 176
Other ..................................................... 11
-------- --------
Net cash used in investing activities ......... (2,672) (1,891)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in short-term debt ............................... (1,085)
Additions to long-term debt ............................... 471 467
Repayments of long-term debt .............................. (318) (313)
Dividends paid ............................................ (1,984) (1,830)
Repurchases of common stock ............................... (159) (1,109)
Sales of common stock ..................................... 130 23
Collection of employee discount on stock .................. 37 15
-------- --------
Net cash used in financing activities ......... (2,908) (2,747)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS .......................................... (211) (82)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .............. (2,827) 1,500
CASH AND CASH EQUIVALENTS, beginning of period ................ 13,528 11,334
-------- --------
CASH AND CASH EQUIVALENTS, end of period ...................... $ 10,701 $ 12,834
======== ========
CASH PAID DURING THE PERIOD FOR:
Interest .................................................. $ 322 $ 208
Income taxes .............................................. 1,039 600
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE> 6
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 July 2, 2000, 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 July 2, 2000.
The Company's fiscal year is based on the 52/53-week period
ending on the Sunday closest to June 30th of each year. For fiscal 2001, the
Company's fiscal year will be a 52-week period.
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>
Three Months Ended
-----------------------------------
October 1, 2000 September 26, 1999
--------------- ------------------
<S> <C> <C>
Basic 14,125 14,627
Effect of dilutive
stock options 72 156
------ ------
Diluted 14,197 14,783
====== ======
</TABLE>
3. Inventories
Inventories were composed of the following:
<TABLE>
<CAPTION>
October 2, 2000 July 2, 2000
--------------- ------------
<S> <C> <C>
Raw materials $14,264 $10,364
Work in process 43 19
Finished goods 32,332 32,492
Packaging supplies 6,669 6,048
------- -------
Total $53,308 $48,923
======= =======
</TABLE>
4
<PAGE> 7
4. Comprehensive Income
The components of comprehensive income were as follows:
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
October 1, 2000 September 26, 1999
--------------- ------------------
<S> <C> <C>
Net income $ 4,788 $ 4,644
Other comprehensive income:
Unrealized gains on marketable
securities, net of tax:
Realized (gains) reclassified
to net income (328) (263)
Unrealized gains (losses) 96 (10)
Unrealized gains on derivative
financial instruments 157 --
Foreign currency translation
adjustment (1,077) (682)
------------ ------------
Total comprehensive income $ 3,636 $ 3,689
============ ============
</TABLE>
5. Segment Information
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
October 1, 2000 September 26, 1999
--------------- ------------------
<S> <C> <C>
Net sales:
Domestic $ 65,583 $ 65,524
Europe 15,039 21,024
Central America 20,906 19,059
------------ ------------
Total consolidated $ 101,528 $ 105,607
============ ============
Income:
Operating income
Domestic $ 7,296 $ 6,183
Europe 265 523
Central America 1,830 2,105
------------ ------------
Total operating income 9,391 8,811
General corporate expense (2,751) (2,595)
------------ ------------
Income from operations 6,640 6,216
Interest expense (313) (203)
Equity in earnings of
unconsolidated affiliates 288 203
Other income, net 373 495
------------ ------------
Income before income taxes and
minority interests $ 6,988 $ 6,711
============ ============
</TABLE>
6. Accounting Principles
Effective July 3, 2000, the Company adopted Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities", as amended. The effect of adopting this statement had
no material impact on the Company's results of operations or financial position.
5
<PAGE> 8
The Financial Accounting Standards Board's Emerging Issues
Task Force (EITF) reached consensus on Issue No. 00-14, "Accounting for Certain
Sales Incentives", in July 2000. This issue addresses the recognition,
measurement and income statement classification for various types of sales
incentives including discounts, coupons, rebates and free products. The Company
will adopt this consensus not later than the fourth quarter of fiscal 2001.
While the impact of this consensus on the Company's consolidated financial
statements is still being evaluated, it is expected to only impact revenue and
expense classifications and not change reported net income.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
THREE MONTHS ENDED OCTOBER 1, 2000 AND SEPTEMBER 26, 1999
RESULTS OF OPERATIONS
For the three months ended October 1, 2000, sales decreased $4.1
million or 3.9% to $101.5 million from $105.6 million recorded for the same
period last year. Volume gains accounted for an increase of $1.1 million. A
combination of price and product mix decreased sales $2.9 million and
unfavorable foreign currency translation reduced sales by $2.3 million. Domestic
rice sales of $64.8 million increased $0.2 million or 0.3% from the prior year
sales of $64.6 million. In the domestic rice business, the retail sector
recorded a $1.1 million or 2.4% decrease in sales. Within the retail sector,
sales of regular rice decreased by $0.1 million or 0.4% despite a unit volume
increase of 2.9% due to the sales mix. Sales of value-added products decreased
by $0.8 million and sales of brown rice decreased by $0.2 million due to lower
unit volumes. In the non-retail sector excluding by-products, sales increased
$1.3 million or 7.9% due to increased unit volumes. Sales in the foodservice
category increased $0.4 million or 16.3% due to a 12.5% increase in unit
volumes. Sales in the industrial category increased 25.6% or $0.8 million on a
15.1% increase in unit volume sales. Export/commodity sales increased $0.1
million due to higher volumes. Sales related to the Company's energy
cogeneration joint venture decreased by $0.1 million. Lower volumes reduced
sales by $0.3 million while increased energy prices added $0.2 million. Sales in
Central America increased $1.8 million or 9.7% to $20.9 million compared to
$19.1 million in the prior year. Higher volumes were recorded in both the fruit
nectars and juices and the cookie and cracker product lines. In total, higher
volumes increased sales by $2.2 million. Higher prices increased sales by $0.5
million and unfavorable currency translation reduced sales by $0.9 million. In
Europe, sales declined by $6.0 million or 28.5% to $15.0 million from $21.0
million last year. Lower unit volumes decreased sales by $3.8 million and a
combination of lower selling prices and product mix reduced sales by $0.9
million. Unfavorable currency translation decreased sales by $1.3 million.
Gross profit increased $1.2 million or 4.0% to $31.8 million from $30.6
million a year ago. Gross profit as a percentage of sales increased to 31.4%
from 29.0% in the corresponding period last year. In the domestic rice business
gross profit increased $1.7 million or 8.0 % to $23.8 million. As a percentage
of sales, gross margin improved to 36.7% from 34.1% last year. In this segment,
gross profit improved primarily due to lower rice costs. In Central America,
gross profit remained even with the same period of the prior year at $6.2
million. As a percentage of sales, in Central America, gross profit decreased to
29.5% from 32.7% last year. The decline in gross profit as a percentage of sales
was due to higher energy costs and manufacturing costs related to new products,
which were not covered by an increase in selling prices due to competitive
market conditions. In Europe, gross profit declined by $0.7 million or 27.2% to
$1.8 million but increased slightly as a percentage of sales to 11.7% from 11.5%
in the same period last year. Gross profit declined due to lower sales.
Operating income increased $0.4 million or 6.8% to $6.6 million from
$6.2 million for the same period last year. As a percentage of sales, operating
income was 6.5%, up from 5.9% last year. In the domestic segment, operating
income increased by $1.1 million to $7.3 million from $6.2 million last year.
The increase in operating income in the domestic segment resulted from the
increase in gross profit addressed previously. In Central America, operating
income decreased by $0.3 million or 13.1% to $1.8 million. The reduction in
operating income in Central America was a result of increased advertising and
promotional spending due to competitive market conditions. In Europe, operating
income decreased $0.3 million to $0.3 million and as a percentage of sales to
1.8% from 2.5% last year.
7
<PAGE> 10
The Company reported a slight amount of net interest expense ($21
thousand) while in the prior year reported net interest income of $0.2 million.
The decrease in interest income was due to a higher level of borrowings
associated with the Company's stock repurchase program.
Other income, excluding interest, remained even with last year at $0.3
million. Increased gains from the sale of marketable securities and equity in
earnings of unconsolidated affiliates were offset by increased other
miscellaneous expenses.
Income tax expense increased $0.1 million to $2.1 million. The
effective rate remained constant at 30.0%. The effective rate is lower than the
statutory rate due to the utilization of energy tax credits associated with the
Company's cogeneration joint venture and foreign source income taxed at lower
rates.
Net income for the current quarter increased $0.2 million or 3.1% to
$4.8 million from $4.6 million in the same period last year. Diluted earnings
per share were $0.34 compared to $0.31.
LIQUIDITY AND FINANCIAL POSITION
Cash provided by operating activities decreased by $3.3 million to $3.0
million for the quarter ended October 1, 2000. Cash decreased due to increased
investment in working capital of $4.4 million. Other assets decreased by $0.4
million while in the prior year they increased by $0.6 million. Other assets
decreased in the current period primarily as a result of dividends received from
unconsolidated affiliates. In the same period last year, other assets increased
due to brand licensing fees.
Cash used in investing activities increased $0.8 million to $2.7
million as compared to cash used in investing activities in the prior year of
$1.9 million. Additions to property, plant and equipment in the current quarter
totaled $2.1 million, a decrease of $0.4 million from the comparable period last
year. There was also an increase in amounts due from affiliates of $1.1 million
whereas in the prior year amounts due to affiliates increased by $0.2 million.
Proceeds from the sale of marketable securities increased $0.1 million.
Cash used in financing activities increased by $0.2 million in the
quarter ended October 1, 2000 to $2.9 million. In the current year the Company
had a net decrease in short and long-term debt of $0.9 million compared to a net
increase of $0.1 million in the same period last year. Funds used for dividend
payments increased by $0.2 million and, during the quarter ended October 1,
2000, 9.5 thousand shares of the Company's common stock were repurchased at a
cost of $0.2 million. In the same period last year, the Company repurchased 57.5
thousand shares of the Company's common stock at a cost of $1.1 million.
On October 18, 2000 the Company's board of directors raised the
quarterly dividend on the Company's common stock to $0.16 per share from $0.14
per share, for an indicated annual rate of $0.64 per share.
As of October 1, 2000, the board of directors of the Company had
authorized the open-market repurchase, from time to time, of up to 3.0 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 October 1, 2000, the Company spent $0.2
million to repurchase 9.5 thousand shares at an average price of $16.71 per
share. Through October 1, 2000, the Company has repurchased a total of 1.9
million shares and 156.5 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.
8
<PAGE> 11
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
As of October 1, 2000, there have been no material changes in the
Company's market risk exposure as described in Management's Discussion and
Analysis contained in the Company's Annual Report on Form 10-K for the fiscal
year ended July 2, 2000.
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> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 15, Letters from Arthur Andersen LLP dated
October 16, 2000, regarding unaudited financial
statements.
Exhibit 27, Financial Data Schedule
(b) No reports on Form 8-K have been filed during the
quarter for which this report is filed.
10
<PAGE> 13
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 6, 2000 By: /s/ E. Wayne Ray, Jr.
---------------------
E. Wayne Ray, Jr.
Vice President, Chief Financial
Officer and
Chief Accounting Officer
11
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
15 Letters from Arthur Andersen LLP dated October 16, 2000,
regarding unaudited financial statements
27 Financial Data Schedule
</TABLE>
12
