-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LQjBL1hKfCSPYTJFT+oBW/lwQS+h+/Fmp4ARccNYw8RMwBUd4lq1OxZlB5KdQH/T rFv8Kpb4xwOeAq3dZ/2wDQ== 0000890566-99-001302.txt : 19990922 0000890566-99-001302.hdr.sgml : 19990922 ACCESSION NUMBER: 0000890566-99-001302 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990627 FILED AS OF DATE: 19990921 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RIVIANA FOODS INC /DE/ CENTRAL INDEX KEY: 0000934650 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 760177572 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-25294 FILM NUMBER: 99714468 BUSINESS ADDRESS: STREET 1: 2777 ALLEN PARKWAY STREET 2: STE 1500 CITY: HOUSON STATE: TX ZIP: 77019-2141 BUSINESS PHONE: 7135293251 MAIL ADDRESS: STREET 1: PO BOX 2636 CITY: HOUSTON STATE: TX ZIP: 77252-2636 10-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 27, 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 RIVIANA FOODS INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 76-0177572 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 2777 ALLEN PARKWAY HOUSTON, TX 77019-2141 (ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 529-3251 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: None. SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, PAR VALUE $1.00 PER SHARE (TITLE OF CLASS) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of September 2, 1999 the aggregate market value of the Registrant's voting stock held by non-affiliates of the Registrant was approximately $125,171,000. The number of shares of Common Stock of the Registrant, par value $1.00 per share, outstanding at August 31, 1999 was 14,608,594. DOCUMENTS INCORPORATED BY REFERENCE Portions of Registrant's definitive Proxy Statement for the 1999 Annual Meeting of Stockholders to be held October 20, 1999 (the "Proxy Statement") are incorporated by reference into Part III, Items 10, 11, 12 and 13. ================================================================================ PART I ITEM 1. BUSINESS. Riviana Foods Inc. ("Riviana", the "Company", or the "Registrant") was incorporated on January 31, 1986. The Company's predecessors date back to 1911 when Frank A. Godchaux began the amalgamation of 25 rice mills in southwest Louisiana. Riviana processes, markets and distributes rice products in the United States, cookies, crackers, fruit juices, nectars and drinks, and processed fruits and vegetables in Central America, and rice and other food products in Europe. For fiscal 1999, the Company's domestic operations accounted for approximately 62% and 69% of net sales and operating income before general corporate expenses, respectively, and international operations accounted for approximately 38% and 31% of net sales and operating income before general corporate expenses, respectively. Riviana's domestic operations consist primarily of sales of retail branded and private-label rice products, sales of rice products to retail food service chains, sales of rice and rice by-products to major food processors and other industrial users and exports of branded and value-added rice products to Puerto Rico and a number of international markets. Sales of retail branded and private-label rice products represent the most significant component of the Company's domestic operations, accounting for approximately 45% of the Company's total net sales during fiscal 1999. By volume, Riviana is the largest seller of retail branded and private-label rice products in the United States, offering a variety of products in each of the retail rice industry's four categories: dried rice (milled white and parboiled rice), instant rice (rice that cooks in 10 minutes or less), prepared rice (specialty mixes) and brown rice. The Company's domestic sales by hundredweight ("cwt") of retail rice products have grown at a compound annual rate of 5% from fiscal 1995 to 1999. The Company believes its consistent growth has resulted from its longstanding national presence and reputation for quality, and its ability to develop and market easy-to-prepare, value-added instant and specialty mix products. Sales of instant and specialty mixes have increased at a compound annual rate of 3% from fiscal 1995 to 1999. The Company markets its branded products under a number of nationally recognized brand names including: MAHATMA(R) -- the best selling brand in the U.S. for ten years. SUCCESS(R) -- the leading brand of instant boil-in-bag rice and the second leading brand of instant rice in the U.S. CAROLINA(R) -- one of the top leading brands of packaged long grain rice in the northeastern and mid-Atlantic U.S. WATERMAID(R) -- the leading brand of medium grain rice in the south and southeastern U.S. RIVERT(R) -- the top-selling brand of packaged medium grain rice in several northeastern and mid-Atlantic U.S. markets. Riviana also markets a variety of easy-to-prepare, flavored rice mixes under the MahatmaT, CarolinaT and SuccessT brand names, including MahatmaT brand Yellow Rice, Red Beans & Rice, Spanish Rice, Black Beans & Rice, Spicy Yellow Rice, Nacho Cheese Rice and Beef Rice, CarolinaT brand Yellow Rice, Black Beans & Rice, Pilaf Rice, Chicken Rice and Spanish Rice, and SuccessT brand Brown & Wild Rice, Broccoli & Cheese Rice, Red Beans & Rice and Grilled Chicken & Broccoli Rice. In addition to its branded products, the Company supplies a full range of private-label rice products -- dried rice, instant rice, rice mixes and brown rice -- to numerous food retailers, including 19 of the top 20 supermarket chains in the United States. In July 1998, the Company also began marketing and distributing retail rice products in the United States and the Bahamas for Riceland Foods, Inc., with whom it also participates in rice flour milling and co-generation projects. 1 The Company supplies parboiled and instant rice in bulk to a number of the nation's major food processors for use as an ingredient in other food products. The Company also markets a range of food service products, principally instant rice, parboiled rice, and rice mixes, to several of the top restaurant chains and food service companies in the United States, and sells bulk rice and rice by-products to industrial users. Riviana exports brand name and value-added rice products to Puerto Rico and a number of foreign countries. The Company's Puerto Rican brands, El MagoT, Sello RojoT and MahatmaT, represent approximately 20% of the total Puerto Rican retail rice market, where per capita rice consumption is approximately five times the United States level. The Company also exports brand-name and private-label rice products to Canada, Mexico and countries in the Caribbean, Europe, Africa and the Middle East. In Central America, the Company operates as one of the largest manufacturers of cookies and crackers and processors of fruits and vegetables through Pozuelo, S.A. ("Pozuelo") in Costa Rica and Alimentos Kern de Guatemala, S.A. ("Kern"). In cookies and crackers, Costa Rica is the largest market, followed by Guatemala and El Salvador. The Company has committed significant resources to the manufacturing of cookies and crackers in the past five years to modernize its facilities and convert them into a modern, efficient baking operation. The principal brands are Riviana PozueloT soda crackers and saltines, BokitasT oil sprayed crackers, FamiliaT assortments of sweet biscuits, and ChikyT, which is a chocolate-enrobed sweet biscuit. In processed fruits and vegetables, the Company produces a wide variety of products, including fruit nectars and juices, fruit drinks, tomato products (sauces, ketchup and paste), canned vegetables and refried beans under the Kern'sT, DucalT, Fun-CT and KoolfrutT brands. These products are sold principally in Central America with the largest markets being Guatemala, Costa Rica and El Salvador. Exports, including refried beans exported to the United States, represent a growing part of the Central American business. Many of the Company's brand name products are market leaders in Central America in their respective categories. Sales in Central America, expressed in dollars, have grown at a compound rate of 4% from fiscal 1995 to 1999. The Central American segment accounted for approximately 18% of net sales and 24% of operating income before general corporate expenses in fiscal 1999. The Company's Belgian subsidiary, N & C Boost N.V. ("N&C"), competes in the continental European rice market through its management of Boost Distribution C.V. ("Boost"). Boost is accounted for as an unconsolidated affiliate and is jointly owned by N&C and Arrocerias Herba, S.A., a major European rice miller and marketer. Boost buys parboiled and regular brown rice in bulk, which it then mills, packages and markets under its own and private-label brand names and in bulk. Boost markets its own brand name, BostoT, which is the leading brand of consumer packaged rice in Belgium. Boost's BossT brand canned cream rice is the leading canned creamed rice in Belgium. Boost also distributes bulk and private-label packaged rice to major retailers in Europe. The Boost joint ownership agreement provides that each party has certain rights to buy the other's interest or require the other to buy its interest. N&C also owns a one-third interest in Herto N.V., a major European rice cake manufacturer. Stevens & Brotherton Ltd. ("S&B"), the Company's United Kingdom subsidiary, is a distribution company that distributes a variety of brand name and private-label products including rice, and canned fruits, vegetables, meats to retail, wholesale, food service and industrial customers in the United Kingdom. S&B also sells branded dried fruits and nuts from Sun-Diamond Growers of California and Welch's Concord grape juice. The products distributed by S&B are all produced by other manufacturers and generate a lower gross profit margin than other Riviana operations. The Company's European operations accounted for approximately 20% of net sales and 7% of operating income before general corporate expenses in fiscal 1999. Financial segment information by geographic area for the most recent three fiscal years is set forth in Item 8, Note 12, "Segment information." 2 The Company is exposed to certain political, economic and other risks inherent in doing business abroad, including exposure to currency exchange rate fluctuations, currency exchange restrictions, potentially unfavorable changes in tax or other laws, partial or total expropriation, and the risks of war, terrorism and other civil disturbances. Additional information related to this matter is set forth in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations". The Company's strategies for minimizing the effect of currency rate fluctuations are to borrow in local currencies, denominate accounts receivable in local currencies and hedge certain short-term foreign product procurement commitments with specific currency exchange contracts. Currency rate fluctuations have not materially impacted the historical results of operations. The functional currencies of the Company's foreign subsidiaries are the local currency of each subsidiary. The Company has a large customer base that includes retail supermarket chains, wholesalers, industrial ingredient users, restaurant chains, breweries and other food processors. No customer, domestic or international, accounted for more than 5% of the Company's consolidated revenues in fiscal 1999. In the United States, the Company supports its branded business primarily with regional media advertising and trade and consumer promotions, including significant coupon and product tie-in programs. These programs are coordinated by Company marketing and sales departments through nine regional managers and a national network of food brokers. The Company's sales of retail rice products are executed on a purchase order basis although the Company does have a limited number of contracts under which it supplies rice products to industrial and international customers on a defined term basis. The Company's sales of retail rice products are conducted through independent food brokers, who are coordinated by the Company's regional sales managers. Products are distributed through a nationwide network of Company and public warehouses. The Company buys rough rice from a variety of farm sources, primarily in Arkansas and Louisiana. No single source accounts for more than 10% of rough rice purchases. In addition to milling rice in its own facilities, the Company purchases significant amounts of rice milled to the Company's specifications from a number of the leading rice milling companies in the United States. In fiscal 1999, 90% of the Company's milled rice purchases were from three suppliers. The Company believes adequate alternative sources of supply are readily available. The Company's competitive position depends largely on continued consumer brand loyalty and its ability to introduce and gain customer acceptance for new products. The Company competes with three major industry leaders and with several regional competitors on the basis of price, quality, brand name recognition, availability of products, and product innovation. The Company is the industry leader in sales of branded rice measured by volume. Mars, Inc., through its subsidiary Uncle Ben's, Inc., is the largest seller of branded rice in the industry measured in dollars. Kraft General Foods Inc., a subsidiary of Philip Morris Companies, Inc., produces the leading brand of instant rice (Minute), and The Quaker Oats Company produces the leading brand of rice mixes (Rice-A-Roni). The Company's Central American subsidiaries have local competitors, some of which are affiliated with multinational companies. New competition has come from an influx of international brands imported from the United States, Mexico and South America attributable largely to declining import duties in Central America. In Belgium, Boost competes with branded products from Master Foods (a subsidiary of Mars, Inc.) as well as branded products packaged by other European millers and processors. In the United Kingdom, S&B competes with European rice millers, including mills in the United Kingdom, from which it also purchases rice, for its share of the rice market. In the private-label market for products other than rice, S&B competes with importers representing world-wide manufacturing operations that process fruits, vegetables and other food products. 3 Although the Company is not involved in rice farming, certain government regulations affecting United States rice farmers have an impact on the Company's cost of raw materials. Substantially all rice grown in the United States is influenced by government programs. In April 1996, the Federal Agriculture Improvement and Reform Act ("1996 Farm Bill") was enacted to replace the 1990 predecessor, the Food, Agriculture, Conservation and Trade Act of 1990 ("1990 Farm Bill"). The 1996 Farm Bill provides marketing loans and agricultural marketing transition payments (as defined) to qualifying farmers for seven years beginning with the 1996 crop. The agricultural market transition payments range on a declining scale from $2.75 per cwt for the 1996 crop to $2.03 per cwt in 2002 and replace similar payments of the 1990 Farm Bill. Unlike the payments under the 1990 Farm Bill, the agricultural market transition payments are fixed without reference to price levels. Other important provisions of the 1996 Farm Bill include the elimination of acreage reduction incentives and increased flexibility of farmers to plant different crops other than rice as market conditions warrant. The changes introduced by the 1996 Farm Bill may have a significant impact on the supply and price level of rice grown in the United States. The Company is subject to various federal, state and local environmental laws and regulations concerning air quality, water quality, and the generation, use and disposal of materials relating to plant operations and to the processing of rice. The Company procures and maintains the necessary environmental permits and licenses in order to operate its facilities and considers itself to be in compliance in all material respects with those environmental laws and regulations currently applicable to its business and operations. Such compliance has not materially affected the Company's business, financial condition or results of operations. The manufacture and marketing of the Company's products are subject to regulation in the United States by federal regulatory agencies, including the Environmental Protection Agency, the Occupational Safety and Health Administration, the Food and Drug Administration ("FDA"), and by various state and local authorities. The FDA also regulates the labeling of the Company's products. The Company's operations outside the United States are subject to similar regulation in a number of countries. Compliance with existing requirements of such governmental bodies has not materially affected the Company's capital expenditures, earnings or competitive position. The Company's brands are protected by numerous trademark registrations in the United States and foreign jurisdictions. The Company believes that its registered trademarks have significant value, and are adequate to protect the brand names significant to its business. As of August 27, 1999, the Company employed approximately 2,767 employees, 22% of whom were covered by collective bargaining agreements. In Houston, Texas, the Company is a party to collective bargaining agreements with General Drivers, Warehousemen and Helpers Teamsters Local Union No. 968, covering a total of 235 employees. In Memphis, Tennessee, the Company is a party to a collective bargaining agreement with Teamsters Local Union No. 1196 covering 98 employees. In Guatemala, Kern is a party to a collective bargaining agreement with a local union covering 281 employees. The Company believes its labor relations are good. 4 ITEM 2. PROPERTIES. The following table lists the Company's principal properties, all of which are owned unless otherwise indicated.
LOCATION NATURE OF FACILITY SQUARE FOOTAGE -------- ------------------ --------------- Houston, Texas........................................ Processing, packaging, technical 170,600 center, warehouse Houston, Texas(1)..................................... Corporate headquarters 52,100 Abbeville, Louisiana.................................. Processing, packaging, warehouse 137,200 Memphis, Tennessee.................................... Packaging, warehouse 99,700 Carlisle, Arkansas.................................... Processing 70,500 Jonesboro, Arkansas(1)................................ Operations, gasification, storage for 6,000 rice hulls Stuttgart, Arkansas(1)................................ Operations, gasification, storage for 36,705 rice hulls Edison, New Jersey(1)................................. Warehouse 99,902 Orpington, England(1)................................. Trading office 11,100 Bristol, England(2)................................... Distribution 210,000 San Jose, Costa Rica.................................. Production, packaging, warehouse 257,000 Guatemala City, Guatemala............................. Production, packaging, warehouse 267,000
- ------------ (1) Leased facility. (2) Contracted space and services. In addition to the properties listed in the table, the Company owns six drying and storage facilities strategically located in the rice growing region of the southeastern United States, and leases warehouse facilities in Houston and Memphis. ITEM 3. LEGAL PROCEEDINGS. The Company is from time to time subject to claims and suits arising in the ordinary course of business. The Company is not currently a party to any proceeding which, in management's opinion, would have a material adverse effect on the Company's financial position or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the fourth quarter of the fiscal year ended June 27, 1999, no matter was submitted to a vote of the stockholders. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Information relating to the Company's common stock is set forth in Item 8 in Note 10, "Capital stock", and in Note 13, "Selected quarterly financial data (unaudited)." On August 19, 1999, the Board of Directors declared a quarterly cash dividend of $0.125 per common share payable October 12, 1999 to stockholders of record on September 7, 1999. The Company has a continuing stock repurchase program. The program authorizes the repurchase of up to 2,000,000 shares of the Company's common stock from time to time. As of August 31, 1999 the Company had repurchased 1,400,500 shares. The Company expects to finance any future repurchases from working capital, unused short-term credit lines and cash flow from operations. 5 ITEM 6. SELECTED FINANCIAL DATA. The following table represents selected consolidated financial data for the Company and its subsidiaries for each of the five fiscal years 1995 through 1999. All amounts are in thousands except per share data.
1999 1998 1997 1996 1995 ---------- ---------- ---------- ---------- ---------- INCOME STATEMENT DATA: Net sales....................... $ 462,761 $ 454,012 $ 460,183 $ 440,492 $ 427,229 Net income...................... 24,255 22,590 20,025 18,342 14,931 Earnings per share: Basic...................... 1.62 1.44 1.27 1.16 0.96 Diluted.................... 1.60 1.42 1.26 1.15 0.96 BALANCE SHEET DATA (AT END OF YEAR): Total assets.................... $ 200,204 $ 205,328 $ 191,889 $ 182,504 $ 175,683 Short-term debt and Current maturities of long-term debt.......................... 1,973 2,705 6,874 13,031 13,276 Long-term debt, net of current maturities.................... 1,390 1,861 2,619 3,644 2,372 Total debt...................... 3,363 4,566 9,493 16,675 15,648 Stockholders' equity............ 130,377 137,744 127,076 116,506 106,795 Dividends paid per share........ 0.47 0.42 0.38 0.3466 0.2499
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis should be read in conjunction with the Company's consolidated financial statements and the related notes. GENERAL The Company operates on a 52/53-week fiscal year ending on the Sunday closest to June 30th. This period is utilized because it closely coincides with the rice crop year in the southern United States and rice is the largest component of the Company's business. The Company operates in various foreign countries and is therefore subject to currency fluctuations. Changes in the value of the United States dollar against these currencies will affect the Company's results of operations and financial position. When the United States dollar strengthens compared to other local currencies, the operating results of the Company's foreign units translate into fewer United States dollars, thus decreasing the revenues and expenses of the Company on a consolidated basis. If the United States dollar weakens against the other relevant currencies, the opposite occurs. The Company's foreign units attempt to minimize the effects of currency risk by borrowing externally in the local currency and by hedging their purchases made in foreign currencies when that option is available. As a matter of policy, the Company does not engage in currency speculation. Changes in exchange rates historically have not materially impacted the Company's net sales, costs or business practices and management expects this to continue. Inflationary conditions in the United States and Europe have been moderate and have not had a material impact on the Company's results of operations or financial position for the three years ended June 27, 1999. Despite higher inflationary rates in Central America, inflation has not had a material impact on the results of operations or financial position of the Company's units located in that region because the Company has generally been able to pass on cost increases to its customers. The Company includes in domestic operations all export sales originating from the United States and sales in Puerto Rico. 6 FISCAL 1999 COMPARED TO FISCAL 1998 For the fiscal year ended June 27, 1999, sales increased $8.8 million or 1.9% to $462.8 million from $454.0 million for the previous fiscal year. Domestic sales increased by $9.1 million or 3.2% to $288.1 million while sales from international operations decreased by $0.3 million to $174.7 million. Increased volumes added $21.7 million to sales and the combined effect of price and sales mix decreased sales by $3.8 million. Unfavorable currency translation reduced sales a further $9.1 million. In the domestic rice business sales of $284.7 million increased $8.6 million or 3.1% from the prior year sales of $276.1 million. In the retail sector, sales increased by $4.2 million or 2.0% to $208.1 million in fiscal 1999 from $203.9 million in the prior year primarily due to increased volumes in regular rice products. Within the retail sector, sales of regular rice increased by $4.6 million or 4.6% due primarily to a unit volume increase of 6.3% that added $6.4 million to sales while the product mix decreased sales by $1.8 million. Sales of value-added products decreased by $1.2 million or 1.3% due primarily to competitive market conditions in the prepared rice mix category. Sales of brown rice increased over the prior year by $0.7 million due to a 5.9% increase in unit volumes. In the non-retail sector, sales increased $4.4 million or 6.1%. Sales increased $0.7 million or 8.8% in the foodservice sector with increased volumes adding $1.5 million and a change in the product mix reducing sales by $0.8 million. The industrial sector recorded a 19.2% increase in unit volumes and a $2.1 million or 18.5% increase in sales. In the lower margin export/commodity sector, sales increased by $2.2 million or 4.5%. Increased volumes added $3.6 million in sales and a combination of price and product mix decreased sales $1.4 million. Lower selling prices for rice byproducts reduced sales by $1.1 million while higher volumes increased sales by $0.4 million. Sales from the Company's energy cogeneration joint venture increased by $0.5 million due to higher volumes of $0.4 million and higher prices of $0.1 million. Sales in Central America increased $4.9 million or 6.4% to $81.2 million compared to $76.3 million in the prior year. Higher volumes were recorded in both fruit nectar and juice products and cookie and cracker product lines. In total, higher volumes increased sales by $7.5 million. Higher prices increased sales by $5.9 million and unfavorable currency translation reduced sales by $8.5 million. In Europe, sales declined by $5.2 million or 5.2% to $93.5 million from $98.7 million last year. Lower unit volumes decreased sales by $0.9 million as the Company continued to eliminate sales of certain lower margin products. A combination of price and product mix reduced sales by $3.7 million and unfavorable currency translation decreased sales by $0.6 million. Gross profit increased by $5.3 million or 4.1% to $134.4 million from $129.1 million a year ago and increased as a percentage of sales to 29.0% from 28.4% due to higher percentage margins in the domestic rice and European segments of the business. In the domestic rice business gross profit increased $4.2 million or 4.4% to $98.2 million from $94.0 million in the same period last year. Gross profit increased primarily as a result of the increased sales volumes and lower rice costs. In the domestic rice business, gross profit as a percentage of sales increased to 34.5% from 34.1%. The domestic energy cogeneration operations increased gross profit to $0.1 million from a break-even position in the prior year. The improved gross profit contribution resulted from increased sales. Gross profit in Central America improved by $1.3 million or 5.5% to $26.0 million, but declined as a percentage of sales to 32.0% from 32.3% in the prior year. The increase in gross profit was directly related to the sales increase and the decline as a percentage of sales was due to a larger portion of sales being made in export markets which carry a lower margin. In Europe gross profit decreased by $0.3 million or 3.1% to $10.1 million and increased as a percentage of sales to 10.8% from 10.6% last year. The decrease in gross profit was due to lower sales volumes and the increase in gross profit as a percentage of sales was due to the product mix. Operating income increased $1.5 million or 5.0% to $32.4 million from $30.9 million in the same period last year. As a percentage of sales, operating income increased to 7.0% from 6.8% in the prior period. The increase in operating income was principally due to improved results in the domestic rice business. Operating income in the domestic rice business increased by $2.4 million or 9.1% to $28.7 million. The increase in operating profit resulted from the $4.2 million improvement in gross profit as discussed above offset by $1.7 million in higher advertising, selling and warehousing expenses which were primarily higher promotional spending in the prepared rice mix category due to competitive market conditions. In Central America, operating income declined $0.3 million or 2.9% to $10.2 million. Increased 7 advertising, selling and warehousing expenses of $1.3 million offset the increase in gross profit of $1.3 million and administrative expenses were $0.3 million higher. The increase in these expenses was related to expanded regional distribution. Operating income in Europe declined $0.3 million or 9.6% to $3.0 million. This decline was directly related to the decrease in gross profit. Other income of $2.8 million increased by $0.8 million from the prior year. Net interest income of $0.3 million for the current period declined $0.1 million from the prior period. Equity in the earnings of unconsolidated affiliates of $1.1 million was $0.2 million lower than the same period last year due principally to a reduction in sales to Russia by the Company's Belgian affiliate. Other miscellaneous income increased by $1.0 million primarily due to the settlement of litigation. Income tax expense of $10.6 million reflected an increase of $0.6 million from the same period last year and the effective rate decreased slightly to 30.1% from 30.2%. This decrease in the rate reflected higher energy tax credits related to the Company's cogeneration joint venture. Net income for the current year increased $1.7 million or 7.4% to $24.3 million from $22.6 million in the prior fiscal year. Diluted earnings per share were $1.60, up from $1.42 in the prior period. FISCAL 1998 COMPARED TO FISCAL 1997 For the fiscal year ended June 28, 1998, sales declined $6.2 million or 1.3% to $454.0 million from $460.2 million for the previous fiscal year. In the prior year, the Company entered into a joint venture with a major rice milling company in Arkansas, which began operations in the fourth quarter of the prior year. The joint venture is involved in the cogeneration of steam and electricity using rice hulls as fuel. This unit added $2.2 million to sales in fiscal 1998 reflecting a full year's operation compared to only one quarter in the prior year. Excluding the effect of the cogeneration business, sales for the period ended June 28, 1998 declined by $8.4 million or 1.8% to $451.1 million from $459.5 in fiscal 1997. Increased volumes added $2.5 million to sales while a combination of price and product mix reduced sales by $7.6 million and unfavorable currency translation reduced sales a further $3.3 million. In the domestic rice business sales of $276.1 million decreased $0.2 million or 0.1% from the prior year sales of $276.3 million. Despite competitive market conditions and declining total-market category sales, the Company's retail sector sales increased by $1.3 million to $203.9 million in fiscal 1998 from $202.6 million in the prior year. Within the retail sector, sales of regular rice increased by $1.5 million or 1.5% due primarily to a unit volume increase of 4.5% that added $2.8 million to sales while the product mix decreased sales by $1.3 million. Sales of value-added products decreased by $0.4 million or 0.4% despite a 1.0% increase in unit volume sales due primarily to competitive market conditions. Sales of brown rice increased over the prior year by $0.2 million due to a 3.5% increase in unit volumes. In the non-retail sector, sales decreased $1.5 million or 2.0%. Sales increased $2.0 million or 33.5% in the foodservice sector with increased volumes adding $3.7 million and a change in the product mix reducing sales by $1.7 million. The industrial sector recorded a 22.7% increase in unit volumes and a $1.5 million or 15.6% increase in sales. In the lower margin export/commodity sector, sales declined by $5.0 million or 8.7%. Lower volumes reduced sales by $3.0 million and a combination of price and product mix decreased sales a further $2.0 million. Sales in Central America increased $1.5 million or 1.9% to $76.3 million compared to $74.8 million in the prior year. Higher volumes were recorded in both fruit nectar and juice products and cookie and cracker product lines. In total, higher volumes increased sales by $2.6 million. Higher prices, particularly in the cookie and cracker product lines, increased sales by $4.1 million and unfavorable currency translation reduced sales by $5.3 million. In Europe, sales declined by $9.7 million or 8.9% to $98.7 million from $108.4 million in the prior year. Lower unit volumes decreased sales by $6.0 million as the Company continued to eliminate sales of certain lower margin products. A combination of price and product mix reduced sales by $5.6 million and favorable currency translation increased sales by $2.0 million. Gross profit increased by $3.7 million or 3.0% to $129.0 million from $125.3 million a year ago and increased as a percentage of sales to 28.4% from 27.2% due to higher percentage margins in all segments of the business. In the domestic rice business gross profit increased $0.6 million or 0.7% to $94.0 million from $93.4 million in the same period in the prior year. Gross profit increased primarily as a result of the product 8 mix of sales and reduced rice costs. In the domestic rice business, gross profit as a percentage of sales increased to 34.1% from 33.8%. The domestic energy cogeneration operations essentially broke even at the gross profit level. As anticipated, initial operating costs in the start-up phase were high. Gross profit in Central America improved by $2.3 million or 10.7% to $24.6 million, and also improved as a percentage of sales to 32.3% from 29.7% in the prior year. Gross profit on the sale of cookie and cracker products increased over the prior year due mostly to improved operating efficiencies. Margins in the Company's fruit nectar and juice products were up reflecting improvements in operating efficiencies and increased volumes. In Europe gross profit increased by $0.8 million or 8.7% to $10.4 million and increased as a percentage of sales to 10.6% from 8.9% in the prior year. The increase in gross profit was due to improved margins on the ethnic rice business and the elimination of lower margin products. Operating income increased $0.8 million or 2.7% to $30.9 million from $30.1 million in the same period last year. As a percentage of sales, operating income increased to 6.8% from 6.5% in the prior period. The increase in operating income was principally due to improved results in Europe and Central America and $0.2 million lower general corporate expenses. The improvement in European operations of $0.9 million was related to the improved gross profit as discussed previously. Operating income in the domestic rice business decreased by $0.8 million or 3.0% to $26.3 million. Competitive market conditions required additional advertising and promotional spending of $1.0 million which more than offset the $0.6 million improvement in gross profit. In Central America, operating income increased by $0.6 million or 6.4% to $10.5 million. The increase in gross profit of $2.3 million was partially offset by increased selling and administrative expenses of $1.7 million related to expanded distribution and new product introductory costs. Other income of $2.1 million increased by $2.2 million from the prior year when the category reflected a net expense of $0.1 million. Net interest income of $0.4 million for the current period improved by $1.8 million from the prior period's net interest expense of $1.4 million. Improved cash flow and declining international interest rates were the main factors affecting this item. Equity in the earnings of unconsolidated affiliates of $1.4 million was $0.6 million higher than the same period in fiscal 1997. In the prior year, a provision of $0.8 million was made to cover the expected loss on the disposition of an unconsolidated affiliate. Also, gain on the sale of marketable securities was $0.1 million lower than the prior year. Income tax expense of $10.0 million reflected an increase of $0.4 million from the same period in the prior year and the effective rate decreased to 30.2% from 31.9%. 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 fiscal year ended June 28, 1998 by $1.7 million and increased net income by $1.1 million, and diluted earnings per share by $0.07. Net income for the current year increased $2.6 million or 12.8% to $22.6 million from $20.0 million in the prior fiscal year. Diluted earnings per share were $1.42, up from $1.26 in the prior period. LIQUIDITY AND CAPITAL RESOURCES The financial condition of the Company remained strong during fiscal 1999. The Company requires liquidity and capital primarily to provide the working capital and plant and equipment to support its operations and growth. The Company's primary sources of liquidity are cash provided by operating activities and external borrowing. A strong working capital position and continued profitable operations are the key factors that allow the Company to generate most of its capital requirements internally. The Company's total of cash and marketable securities at June 27, 1999 exceeded total debt by $11.3 million. The ratio of debt to total capitalization (total debt plus stockholders' equity) decreased to 9 2.5% at the end of fiscal 1999 from 3.2% the previous year. The current ratio decreased to 2.0 in fiscal 1999 from 2.4 at the end of the prior year. Consistent with historical results, operations provided a strong, positive cash flow in fiscal 1999, which resulted in net cash provided by operations of $30.8 million. This represented a decrease of $2.0 million from the prior year. Net income increased by $1.7 million or 7.4% to $24.3 million and non-cash depreciation and amortization charges increased by $1.2 million. Based on the Consolidated Statements of Cash Flows which eliminate the effect of fluctuations in foreign currency translation rates, working capital requirements were reduced and cash of $4.5 million was provided compared to the prior year when working capital requirements also decreased and provided cash of $5.7 million. The largest change was in accounts receivable. In fiscal 1999, excluding the effect of exchange rate changes, accounts receivable increased by $3.1 million whereas in the prior year accounts receivable decreased by $1.7 million. Inventories in the current year decreased $1.0 million while in the prior year inventories increased $1.9 million. Accounts payable and accrued liabilities increased by $6.1 million in the current year compared to an increase of $4.6 million in the previous period due primarily to the timing of transactions. For the three year period ended June 27, 1999, net cash provided by operations has exceeded capital expenditures by $48.3 million. Cash used in investing activities remained at the same $8.2 million level as last year. Purchases of property, plant and equipment totaled $9.5 million, which was $2.0 million less than the same period last year. Cash outflows related to amounts due to affiliates were $0.7 million compared to cash inflows of $1.2 million in the prior year. Cash used in financing activities totaled $27.6 million for the current year which was an increase of $13.4 million over the prior year. During the current period the Company repurchased 1.0 million shares of its common stock paying $20.3 million. In the prior year the Company repurchased 0.2 million shares at a cost of $3.9 million. In the current period, $0.7 million was used to repay net borrowings compared to $4.4 million used to repay net borrowings in the previous year. Dividend payments during the current year were $7.1 million, up $0.5 million from $6.6 million paid last year. Dividends paid per share of common stock increased 11.9% to $0.47 in fiscal 1999. The board of directors of the Company has 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. During 1999 the Company spent $20.3 million to repurchase 1.0 million shares at an average price of $19.92 per share. Through the end of fiscal 1999, the Company has repurchased a total of 1.4 million shares and 126 thousand shares have been reissued upon exercise of employee stock options. The Company has a $30.0 million domestic, short-term, unsecured revolving credit facility with one bank. Under the terms of this facility, the Company has the option of borrowing at the bank's prime rate or at the Eurodollar rate plus 3/8%. At June 27, 1999, the Company had no loans and $1.6 million in letters of credit outstanding under this credit facility. This facility will expire in fiscal 2000 and the Company expects to renew the facility for another one-year period. The agreement contains limited financial covenants and the Company is currently in compliance with all of these covenants. The Company's international operations are financed internally or through borrowings in local currency without the benefit of parent Company guarantees. The Company's foreign subsidiaries have a total of $15.0 million in short-term credit lines from local sources and at June 27, 1999 the subsidiaries have borrowed a total of $1.0 million. The Company holds a portfolio of marketable securities with a market value of $3.4 million at June 27, 1999, which is available to provide additional liquidity. The Company believes that the combination of its working capital, unused and available short-term credit lines and cash flow from operations will provide it with sufficient capital resources and liquidity to meet its foreseeable needs. 10 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. At June 27, 1999, the Company had outstanding futures contracts to purchase $8.1 million of rough rice, swap contracts relating to the purchase of $1.4 million of packaging material and had established bank lines available to purchase forward currency exchange contracts in the amount of $41.7 million of which $10.4 million was outstanding. Gains and losses deferred in these instruments at June 27, 1999, were $0.2 million and $1.7 million, respectively. 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 economic exposures for which speculative accounting treatment of the hedging instrument would be required. The information below presents the Company's rough rice futures positions outstanding as of June 27, 1999. All other derivative financial instruments are not material as of June 27, 1999.
EXPECTED MATURITY FISCAL 2000 ----------------- Futures contracts (long positions): Contract volumes (cwt).......... 1,020,000 Weighted average contract price (per cwt)..................... $ 7.99 Contract amount................. $ 8,147,772 Weighted average fair value (per cwt).......................... $ 6.45 Fair value...................... $ 6,581,400
IMPACT OF THE YEAR 2000 ISSUE The Company is currently working to resolve the potential impact of the year 2000 on the processing of date-sensitive data by the Company's computerized information systems. The year 2000 is critical to these systems as many computer programs are written using two digits rather than four to define the applicable year. As a result, any of the Company's computer applications that have date-sensitive programs may recognize a date using "00"as the year 1900 rather than the year 2000. This could result in a system failure or miscalculation causing disruptions including but not limited to a temporary inability to process transactions, issue invoices, communicate with customers and financial institutions and update internal accounting systems. If not corrected, such disruptions could have a significant impact on the Company's operations. The Company has initiated a Company-wide program to prepare the Company's computer systems and applications for the year 2000. Based on present information, the Company believes that it will be able to achieve year 2000 compliance through modification of some existing programs and the replacement of other programs with new programs that are already year 2000 compliant. The Company will utilize both internal and external resources to reprogram, or replace, and test software for year 2000 compliance. The Company plans to complete the year 2000 conversion project by September 30, 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 in which case costs will be capitalized. The Company is taking steps to resolve year 2000 compliance issues that may be created by customers, suppliers and financial institutions with whom the Company does business. However, there can be no guarantee that the systems of other entities will be converted timely. A failure to convert by another entity could have a significant adverse effect on the Company. 11 The costs of the year 2000 conversion project and the date on which the Company plans to complete the project are based on management's best estimates, which were derived using numerous assumptions of future events including the continued availability of certain resources, third party modification plans and other factors. There can be no guarantee that these estimates will be achieved and actual results could vary significantly from current estimates. The Company does not have a written contingency plan to address the issues that could arise should the Company or any of its suppliers or customers not be prepared to accommodate year 2000 issues timely. The Company believes that in an emergency it could revert to the use of manual systems that do not rely on computers and could perform the minimum functions required to maintain the flow of goods and provide information reporting to maintain satisfactory control of the business. Should the Company have to utilize manual systems, it is uncertain that it could maintain the same level of operations and this could have a material adverse impact on the business. The Company intends to maintain constant surveillance on this situation and will develop such contingency plans as are required by the changing environment. FORWARD LOOKING STATEMENTS The statements contained in this Form 10-K 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. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Consolidated Financial Statements: Consolidated Balance Sheets as of June 27, 1999, and June 28, 1998........................... 13 Consolidated Statements of Income for the fiscal years ended June 27, 1999, June 28, 1998, and June 29, 1997........................... 14 Consolidated Statements of Capital Accounts and Retained Earnings for the fiscal years ended June 27, 1999, June 28, 1998, and June 29, 1997........ 15 Consolidated Statements of Comprehensive Income and Accumulated Other Comprehensive Income for the fiscal years ended June 27, 1999, June 28, 1998, and June 29, 1997........................... 15 Consolidated Statements of Cash Flows for the fiscal years ended June 27, 1999, June 28, 1998, and June 29, 1997........................... 16 Notes to Consolidated Financial Statements..................... 17 Report of Independent Public Accountants.................... 31
12 RIVIANA FOODS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JUNE 27, 1999 JUNE 28, 1998 -------------- -------------- ASSETS CURRENT ASSETS: Cash............................ $ 5,605 $ 7,609 Cash equivalents................ 5,729 9,588 Marketable securities........... 3,366 4,328 Accounts receivable, less allowance for doubtful accounts of $1,386 and $1,265............. 42,079 40,514 Inventories..................... 46,570 49,566 Prepaid expenses................ 2,247 2,008 -------------- -------------- Total current assets....... 105,596 113,613 PROPERTY, PLANT AND EQUIPMENT: Land............................ 3,504 3,530 Buildings....................... 26,853 25,271 Machinery and equipment......... 91,557 87,668 -------------- -------------- Property, plant and equipment, gross....... 121,914 116,469 Less accumulated depreciation... (44,579) (41,241) -------------- -------------- Property, plant and equipment, net......... 77,335 75,228 INVESTMENTS IN UNCONSOLIDATED AFFILIATES......................... 9,958 10,130 OTHER ASSETS......................... 7,315 6,357 -------------- -------------- Total assets............... $200,204 $205,328 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt................. $ 970 $ 1,280 Current maturities of long-term debt............................ 1,003 1,425 Accounts payable................ 24,893 23,988 Accrued liabilities............. 18,870 14,894 Income taxes payable............ 6,938 6,255 -------------- -------------- Total current liabilities.................. 52,674 47,842 LONG-TERM DEBT, net of current maturities........................... 1,390 1,861 DUE TO AFFILIATES.................... 506 1,347 DEFERRED INCOME TAXES................ 5,809 6,805 OTHER NONCURRENT LIABILITIES......... 2,964 3,246 COMMITMENTS AND CONTINGENCIES........ MINORITY INTERESTS................... 6,484 6,483 STOCKHOLDERS' EQUITY: Preferred stock, $1 par, 5,000 shares authorized, none issued......................... Common stock, $1 par, 24,000 shares authorized, 15,883 issued......................... 15,883 15,883 Paid-in capital................. 6,519 6,455 Retained earnings............... 142,424 125,503 Accumulated other comprehensive income......................... (9,606) (4,964) Treasury stock, at cost, 1,237 and 254 shares................. (24,843) (5,133) -------------- -------------- Total stockholders' equity....................... 130,377 137,744 -------------- -------------- Total liabilities and stockholders' equity......... $200,204 $205,328 ============== ==============
The accompanying notes are an integral part of these consolidated financial statements. 13 RIVIANA FOODS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED ----------------------------------------------- JUNE 27, 1999 JUNE 28, 1998 JUNE 29, 1997 ------------- ------------- ------------- NET SALES............................ $ 462,761 $ 454,012 $ 460,183 COST OF SALES........................ 328,395 324,919 334,837 ------------- ------------- ------------- Gross profit.................... 134,366 129,093 125,346 ------------- ------------- ------------- COSTS AND EXPENSES: Advertising, selling and warehousing................... 81,184 78,199 75,879 Administrative and general...... 20,772 20,026 19,413 ------------- ------------- ------------- Total costs and expenses... 101,956 98,225 95,292 ------------- ------------- ------------- Income from operations..... 32,410 30,868 30,054 OTHER INCOME (EXPENSE): Gain on sale of marketable securities.................... 1,613 1,584 1,676 Interest income................. 1,388 1,061 587 Interest expense................ (1,039) (619) (2,002) Equity in earnings of unconsolidated affiliates..... 1,142 1,363 796 Other expense, net.............. (291) (1,324) (1,189) ------------- ------------- ------------- Total other income (expense)............... 2,813 2,065 (132) ------------- ------------- ------------- Income before income taxes and minority interests............... 35,223 32,933 29,922 INCOME TAX EXPENSE................... 10,592 9,956 9,559 MINORITY INTERESTS IN EARNINGS OF CONSOLIDATED SUBSIDIARIES.......... 376 387 338 ------------- ------------- ------------- NET INCOME...................... $ 24,255 $ 22,590 $ 20,025 ============= ============= ============= Earnings per share: Basic........................... $ 1.62 $ 1.44 $ 1.27 Diluted......................... 1.60 1.42 1.26 Weighted average common shares outstanding: Basic........................... 14,987 15,727 15,814 Diluted......................... 15,187 15,936 15,919
The accompanying notes are an integral part of these consolidated financial statements. 14 RIVIANA FOODS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CAPITAL ACCOUNTS AND RETAINED EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
COMMON STOCK TREASURY STOCK ------------------- PAID-IN RETAINED ------------------- SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT TOTAL --------- ------- -------- --------- ------- -------- --------- BALANCE, June 30, 1996............... 15,883 $15,883 $6,067 $ 96,036 (16 ) $ (208) $ 117,778 Net income....................... 20,025 20,025 Sales of common stock............ (47) 23 323 276 Dividends declared ($.39 per share)......................... (6,163) (6,163) Repurchases of common stock...... (137 ) (2,202) (2,202) Collection of employee discount on stock....................... 117 117 Tax credit for disqualifying dispositions of stock.......... 31 31 --------- ------- -------- --------- ------- -------- --------- BALANCE, June 29, 1997............... 15,883 15,883 6,215 109,851 (130 ) (2,087) 129,862 Net income....................... 22,590 22,590 Sales of common stock............ (181) 55 861 680 Dividends declared ($.43 per share)......................... (6,757) (6,757) Repurchases of common stock...... (179 ) (3,907) (3,907) Collection of employee discount on stock....................... 120 120 Tax credit for disqualifying dispositions of stock.......... 120 120 --------- ------- -------- --------- ------- -------- --------- BALANCE, June 28, 1998............... 15,883 15,883 6,455 125,503 (254 ) (5,133) 142,708 Net income....................... 24,255 24,255 Sales of common stock............ (90) 37 601 511 Dividends declared ($.485 per share)......................... (7,244) (7,244) Repurchases of common stock...... (1,020 ) (20,311) (20,311) Collection of employee discount on stock....................... 13 13 Tax credit for disqualifying dispositions of stock.......... 51 51 --------- ------- -------- --------- ------- -------- --------- BALANCE, June 27, 1999............... 15,883 $15,883 $6,519 $ 142,424 (1,237 ) $(24,843) $ 139,983 ========= ======= ======== ========= ======= ======== =========
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME (IN THOUSANDS)
UNREALIZED CUMULATIVE GAINS FOREIGN ACCUMULATED ON MARKETABLE CURRENCY OTHER SECURITIES, TRANSLATION COMPREHENSIVE COMPREHENSIVE NET OF TAXES ADJUSTMENT INCOME INCOME ------------- ----------- ------------- ------------- BALANCE, June 30, 1996............... $ 2,364 $ (3,636) $(1,272) Net income....................... $20,025 Marketable securities, net of taxes: Realized (gains)............ (1,161) (1,161) (1,161) Unrealized gains............ 1,070 1,070 1,070 Effect of balance sheet translations................... (1,423) (1,423) (1,423) ------------- COMPREHENSIVE INCOME................. $18,511 ============= ------------- ----------- ------------- BALANCE, June 29, 1997............... 2,273 (5,059) (2,786) Net income....................... $22,590 Marketable securities, net of taxes: Realized (gains)............ (1,029) (1,029) (1,029) Unrealized gains............ 1,150 1,150 1,150 Effect of balance sheet translations................... (2,299) (2,299) (2,299) ------------- COMPREHENSIVE INCOME................. $20,412 ============= ------------- ----------- ------------- BALANCE, June 28, 1998............... 2,394 (7,358) (4,964) Net income....................... $24,255 Marketable securities, net of taxes: Realized (gains)............ (1,058) (1,058) (1,058) Unrealized gains............ 529 529 529 Effect of balance sheet translations................... (4,113) (4,113) (4,113) ------------- COMPREHENSIVE INCOME................. $19,613 ============= ------------- ----------- ------------- BALANCE, June 27, 1999............... $ 1,865 $ (11,471) ($9,606) ============= =========== =============
The accompanying notes are an integral part of these consolidated financial statements. 15 RIVIANA FOODS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEARS ENDED ----------------------------------------------- JUNE 27, 1999 JUNE 28, 1998 JUNE 29, 1997 ------------- ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income...................... $ 24,255 $ 22,590 $ 20,025 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............ 5,714 4,506 5,228 Deferred income taxes...... (706) 876 (413) Gain on disposition of assets.................. (1,564) (1,567) (1,566) Equity in earnings of unconsolidated affiliates.............. (1,142) (1,363) (796) Change in assets and liabilities: Accounts receivable, net................ (3,097) 1,750 (187) Inventories........... 961 (1,920) 5,193 Prepaid expenses...... (340) 217 (177) Other assets.......... (260) 1,560 (18) Accounts payable and accrued liabilities........ 6,096 4,649 (1,224) Income taxes payable............ 867 967 1,448 Other noncurrent liabilities........ (121) 341 67 Minority interests.... 90 142 242 ------------- ------------- ------------- Net cash provided by operating activities.... 30,753 32,748 27,822 ------------- ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment..................... (9,471) (11,498) (22,031) Proceeds from disposals of property, plant and equipment..................... 114 157 63 Investment by joint venture partner....................... 75 4,759 Proceeds from sale of marketable securities.................... 1,762 1,727 5,503 Increase (decrease) in due to affiliates.................... (673) 1,208 (707) Increase in marketable securities.................... (10) (95) Other........................... 40 166 52 ------------- ------------- ------------- Net cash used in investing activities.... (8,228) (8,175) (12,456) ------------- ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in short-term debt..... (138) (3,574) (5,903) Additions to long-term debt..... 1,443 888 763 Repayments of long-term debt.... (1,973) (1,759) (2,440) Dividends paid.................. (7,135) (6,613) (6,017) Repurchases of common stock..... (20,311) (3,907) (2,202) Sales of common stock........... 511 680 276 Collection of employee discount on stock...................... 13 120 117 ------------- ------------- ------------- Net cash used in financing activities.... (27,590) (14,165) (15,406) ------------- ------------- ------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS.......... (798) (251) (310) ------------- ------------- ------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................ (5,863) 10,157 (350) CASH AND CASH EQUIVALENTS, beginning of period.......................... 17,197 7,040 7,390 ------------- ------------- ------------- CASH AND CASH EQUIVALENTS, end of period............................. $ 11,334 $ 17,197 $ 7,040 ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements. 16 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 27, 1999, JUNE 28, 1998 AND JUNE 29, 1997 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (1) ORGANIZATION AND NATURE OF BUSINESS: Riviana Foods Inc. (Riviana) and subsidiaries (collectively, Company) are primarily engaged in the processing, marketing and distributing of rice and other food products. The Company has rice operations in the United States and in Belgium through unconsolidated affiliates, Boost Distribution C.V. (Boost) and Herto N.V. (Herto), food operations in Guatemala and Costa Rica, Alimentos Kern de Guatemala, S.A. (Kern) and Pozuelo, S.A. (Pozuelo), and a food distribution operation in the United Kingdom, Stevens & Brotherton Ltd. (S&B). In the United States, the Company processes, markets and distributes branded and private-label rice products to the retail grocery trade and food service industry, rice and rice by-products to industrial customers and branded products to Puerto Rico and international markets. Riviana's primary domestic brand names are Success(R), Mahatma(R), Carolina(R), River(R), Watermaid(R), Sello Rojo(R) and El Mago(R). Also, the Company is a partner in joint ventures with another rice company in rice flour processing and co-generation of power from the gasification of rice hulls. Through unconsolidated affiliates Boost and Herto, the Company processes and sells packaged rice products under the BostoT brand within Belgium, private-label packaged rice products to major retailers in the European Union and both bulk and branded rice products to Eastern Europe and other export markets. In Central America, Kern produces and markets a wide range of processed fruits and vegetables under the Kern's(R), Ducal(R), Koolfrut(R) and Fun-C(R) brands. Pozuelo produces and markets cookies and crackers under the Riviana PozueloT brand. Both Kern's and Pozuelo's products are sold primarily in Central America with some products under the Ducal(R) and Riviana Pozuelo(R) brands exported to certain United States markets. S&B distributes rice under the Phoenix(R) brand and private labels as well as dried fruits, processed meats and other food products to retail, wholesale, food service and industrial customers in the United Kingdom. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: FISCAL REPORTING PERIODS The Company operates on a 52/53 week fiscal year ending on the Sunday closest to June 30. This period is utilized as it is a natural business year closely coinciding with the rice crop year in the southern United States, rice being the largest component of the Company's sales. All fiscal years presented are 52-week fiscal years. CONSOLIDATION The consolidated financial statements include the accounts of Riviana and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. INVESTMENTS IN UNCONSOLIDATED AFFILIATES The Company has equity investments in certain food processing, marketing and distribution companies, which are accounted for utilizing the equity method of accounting. Ownership interests range from 33 to 50 percent in these unconsolidated affiliates. 17 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following represents summarized financial information with respect to the assets, liabilities and results of operations of the unconsolidated affiliates. BALANCE SHEET DATA JUNE 27, 1999 JUNE 28, 1998 - ------------------------------------- ------------- ------------- Current assets....................... $32,820 $29,428 Noncurrent assets.................... 14,313 14,735 ------------- ------------- Total assets............... $47,133 $44,163 ============= ============= Current liabilities.................. $18,995 $14,700 Noncurrent liabilities............... 6,680 7,827 Common equity: Riviana......................... 9,958 10,130 Other........................... 11,500 11,506 ------------- ------------- Total liabilities and equity.................. $47,133 $44,163 ============= ============= INCOME STATEMENT DATA 1999 1998 1997 - ------------------------------------- --------- --------- ---------- Net sales............................ $ 95,579 $ 91,901 $ 118,511 Gross profit......................... 13,625 16,265 16,150 Income before income taxes........... 3,281 3,458 4,301 Net income........................... 2,654 2,390 3,037 Equity in earnings of unconsolidated affiliates......................... 1,142 1,363 796 CHANGES IN ACCOUNTING PRINCIPLES Effective July 1, 1996, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", and SFAS No. 123, "Accounting for Stock-Based Compensation". As allowed by SFAS No. 123, the Company elected to continue to account for stock option grants in accordance with Accounting Principles Board (APB) Opinion No. 25, and, accordingly, will recognize no expense for stock options granted, as all option plans require that the option exercise price be equal to the fair value of the common stock at the date of grant. See Note 11 for the pro forma impact of adoption of SFAS No. 123. Effective January 1, 1997, the Company adopted SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". Effective December 28, 1997, the Company adopted SFAS No. 128, "Earnings per Share", which revises the manner in which earnings per share is calculated. All per share amounts included herein have been restated accordingly. The effect of adopting these statements had no material impact on the Company's results of operations or financial position. Effective June 29, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income", which requires that net income, as reported, be adjusted by changes in unrealized gains on marketable securities, net of taxes, and cumulative foreign currency translation adjustment. See the accompanying Consolidated Statements of Comprehensive Income and Accumulated Comprehensive Income. RECENTLY ISSUED ACCOUNTING STANDARDS In March 1998 and April 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", and SOP 98-5, "Reporting on the Costs of Start-Up Activities". The Company will adopt these pronouncements in the first quarter of 2000 and does not expect adoption to have a material impact on the Company's results of operations or financial position. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", was issued in June 1998 and amended in June 1999 by SFAS No. 137, "Accounting for Derivative Instruments and 18 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Hedging Activities -- Deferral of the Effective Date of FASB Statement No. 133". The Company will adopt these pronouncements in the first quarter of 2001 and does not expect adoption to have a material impact on the Company's results of operations or financial position. ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS For purposes of the consolidated balance sheets and the consolidated statements of cash flows, the Company considers all investments with original maturities of three months or less to be cash equivalents. ACCOUNTS RECEIVABLE In the normal course of business, the Company extends credit to its customers. The Company regularly reviews the accounts and makes adequate provision for any potentially uncollectible balances. Management believes that the Company has no significant concentrations of credit risk and has incurred no impairments in the carrying values of its accounts receivable, other than that for which provision has been made. INVENTORIES Inventories are valued at the lower of cost or market. Cost is determined on the first-in, first-out (FIFO) method. Inventories were composed of the following: JUNE 27, 1999 JUNE 28, 1998 -------------- -------------- Raw materials........................ $ 8,994 $ 9,390 Work in process...................... 29 23 Finished goods....................... 31,785 34,007 Packaging supplies................... 5,762 6,146 -------------- -------------- Total...................... $ 46,570 $ 49,566 ============== ============== PROPERTY, PLANT AND EQUIPMENT Land, buildings, machinery and equipment are stated at cost. Depreciation is provided for financial reporting purposes on the straight-line basis over the following estimated useful lives: Buildings............................ 30 to 40 years Machinery and equipment.............. 3 to 15 years Maintenance, repairs and minor replacements are charged against income as incurred; major replacements and betterments are capitalized. The cost of assets sold or retired and the related accumulated depreciation is removed from the accounts at the time of disposition, and any resulting gain or loss is reflected as other income or expense for the period. OTHER NONCURRENT LIABILITIES Other noncurrent liabilities are composed primarily of certain postretirement benefits and staff termination indemnities. 19 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) REVENUE RECOGNITION Sales are recognized when products are shipped. ADVERTISING The costs of advertising, promotion and marketing programs are charged to operations in the period incurred. 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: 1999 1998 1997 --------- --------- --------- Basic................................ 14,987 15,727 15,814 Effect of dilutive stock options..... 200 209 105 --------- --------- --------- Diluted.............................. 15,187 15,936 15,919 ========= ========= ========= In the calculation of the effect of dilutive stock options, 8, 1 and 16 anti-dilutive stock option shares have been excluded for 1999, 1998 and 1997. TRANSLATION OF FOREIGN CURRENCIES The assets and liabilities of consolidated foreign subsidiaries are translated into United States dollars at exchange rates in effect at the date of the financial statements. Revenues and expenses are translated at the average rates during the reporting periods. Resulting translation gains and losses are accumulated as a separate component of accumulated other comprehensive income in stockholders' equity. Because the Company follows the policy of not providing taxes on unremitted foreign earnings as discussed in Note 6, such translation gains and losses are not tax effected. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments other than derivative financial instruments consist primarily of cash, cash equivalents, trade receivables, trade payables and debt instruments. The Company periodically reviews these instruments for impairment of value and records a provision for any impairment identified. The book values of these instruments are considered to be representative of their respective fair values. DERIVATIVE FINANCIAL INSTRUMENTS 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 rates agreed to at the inception of the contracts. At June 27, 1999, the Company had outstanding futures contracts to purchase $8,148 of rough rice, swap contracts relating to the purchase of $1,365 of packaging materials and had established bank lines available to purchase forward exchange contracts in the amount of $41,661, of which $10,369 was outstanding. Gains and losses deferred in outstanding instruments at June 27, 1999, were $220 and $1,712. 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 economic exposures for which speculative accounting treatment of the hedging instrument would be required. 20 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) RECLASSIFICATION Certain prior-year balances have been reclassified to conform with the current-year presentation. (3) MARKETABLE SECURITIES: Investments in debt and equity securities are recorded as required by SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The Company's marketable securities consist of high-grade equity securities that are all considered available for sale. Available-for-sale securities, securities that the Company purchased without any specific intent to sell in the near term, are carried at fair value with unrealized gains and losses included directly in stockholders' equity, net of applicable deferred income taxes. The basis upon which costs were determined in computing realized gains was specific identification. JUNE 27, 1999 JUNE 28, 1998 -------------- -------------- Aggregate fair value................. $3,366 $4,328 Cost basis........................... 496 645 -------------- -------------- Unrealized net gain before taxes........................... 2,870 3,683 Income taxes......................... 1,005 1,289 -------------- -------------- Unrealized gain, net of taxes... $1,865 $2,394 ============== ============== Unrealized gains..................... $2,879 $3,699 Unrealized losses.................... (9) (16) -------------- -------------- Unrealized net gain before taxes........................... $2,870 $3,683 ============== ============== 1999 1998 1997 --------- --------- --------- Proceeds from sales of marketable securities......................... $ 1,762 $ 1,727 $ 5,503 Realized gross gains................. 1,628 1,584 1,681 Realized gross losses................ (5) (4) ACCRUED LIABILITIES: Accrued liabilities consisted of the following: JUNE 27, 1999 JUNE 28, 1998 ------------- ------------- Payroll, commissions and bonuses..... $ 9,984 $ 8,111 Coupon redemption and advertising.... 1,875 1,557 Taxes, other than income taxes....... 2,222 2,364 Other................................ 4,789 2,862 ------------- ------------- Total........................... $18,870 $14,894 ============= ============= (5) BORROWING ARRANGEMENTS: Interest rates related to short-term debt vary according to the country in which the funds are borrowed, but generally approximate the market rate of interest. The weighted average interest rate at June 27, 1999, and June 28, 1998, was 16.2% and 12.0%. A portion of the short-term debt at June 27, 1999, and June 28, 1998, is secured by certain assets of the foreign subsidiaries. The Company has unused lines of credit totaling about $42,025 at June 27, 1999, net of borrowings and $1,600 in letters of credit. 21 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Long-term debt consisted of the following: JUNE 27, 1999 JUNE 28, 1998 ------------- ------------- Total long-term debt................. $ 2,393 $ 3,286 Less current maturities.............. 1,003 1,425 ------------- ------------- Long-term debt, net of current maturities.................... $ 1,390 $ 1,861 ============= ============= Total long-term debt at June 27, 1999, matures as follows: 2000................................. $ 1,003 2001................................. 334 2002................................. 211 2003................................. 211 2004................................. 211 Thereafter........................... 423 --------- Total........................... $ 2,393 ========= Total interest paid was $1,036, $930 and $2,025 for 1999, 1998 and 1997. (6) INCOME TAXES: The provision for income taxes consisted of the following: 1999 1998 1997 --------- --------- --------- Federal.............................. $ 7,365 $ 5,351 $ 6,432 State................................ 575 517 556 Foreign.............................. 3,648 3,167 3,035 --------- --------- --------- Total current provision......... 11,588 9,035 10,023 --------- --------- --------- Federal.............................. (998) 953 (443) Foreign.............................. 2 (32) (21) --------- --------- --------- Total deferred provision (benefit)..................... (996) 921 (464) --------- --------- --------- Income tax expense.............. $ 10,592 $ 9,956 $ 9,559 ========= ========= ========= Total income taxes paid.............. $ 10,999 $ 8,444 $ 8,396 ========= ========= ========= 22 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The difference between the statutory United States federal income tax rate and the Company's global effective tax rate as reflected in the consolidated statements of income was as follows:
1999 1998 1997 -------------------- -------------------- -------------------- PERCENT PERCENT PERCENT TAX OF TAX OF TAX OF EXPENSE PRETAX EXPENSE PRETAX EXPENSE PRETAX (BENEFIT) INCOME (BENEFIT) INCOME (BENEFIT) INCOME --------- ------- --------- ------- --------- ------- Taxes at U.S. federal statutory rate............................... $ 12,328 35.0% $ 11,527 35.0% $ 10,473 35.0% Resolution of issues at less than estimate previously provided....... (753) (2.3) Foreign earnings subject to tax rates that are different than the U.S. federal statutory rate............. (1,602) (4.5) (1,122) (3.4) (923) (3.1) State taxes, net of federal benefit............................ 374 1.1 336 1.0 362 1.2 Taxes on dividends received from foreign subsidiaries............... 516 1.4 210 0.6 211 0.7 Other................................ (1,024) (2.9) (242) (0.7) (564) (1.9) --------- ------- --------- ------- --------- ------- Income tax expense/effective rate.......................... $ 10,592 30.1% $ 9,956 30.2% $ 9,559 31.9% ========= ======= ========= ======= ========= =======
The components of deferred taxes were as follows: JUNE 27, 1999 JUNE 28, 1998 ------------- ------------- Staff termination indemnities........ $ 37 $ 204 Accrued employee benefits............ 1,618 983 State taxes.......................... 554 833 Accrued liabilities.................. 1,318 1,282 Allowance for doubtful accounts...... 241 255 Other................................ 2 2 ------------- ------------- Total deferred tax assets....... 3,770 3,559 ------------- ------------- Property, plant and equipment and other.............................. 7,857 7,907 Inventories.......................... 717 1,168 Marketable securities................ 1,005 1,289 ------------- ------------- Total deferred tax liabilities................... 9,579 10,364 ------------- ------------- Net deferred tax liabilities............. $ 5,809 $ 6,805 ============= ============= Income before income taxes and minority interests of foreign subsidiaries was $14,093, $14,030 and $10,959 for 1999, 1998 and 1997. The Company does not provide deferred income taxes on unremitted earnings of foreign subsidiaries, since such earnings are considered to be permanently invested. Cumulative unremitted earnings of foreign subsidiaries were $41,216, $36,323 and $32,967 as of June 27, 1999, June 28, 1998, and June 29, 1997. 23 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (7) PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS: Riviana has a defined benefit plan covering substantially all United States employees. The benefits are based on years of service and the employee's compensation. The Company's funding policy is to contribute annually at least the minimum amount actuarially necessary to provide for retirement benefits. The following sets forth summarized information regarding the Company's defined benefit retirement plan: 1999 1998 --------- --------- Change in projected benefit obligations: Benefit obligations at the beginning of year............. $ 21,317 $ 17,717 Service cost.................... 2,303 2,079 Interest cost................... 1,365 1,156 Actuarial (gain) loss........... (508) 1,404 Plan disbursements.............. (1,558) (1,039) --------- --------- Benefit obligations at the end of year....................... $ 22,919 $ 21,317 ========= ========= Change in plan assets: Fair value of plan assets at beginning of year............. $ 21,288 $ 17,453 Actual return on plan assets.... 4,489 3,601 Company contributions........... 1,273 Plan disbursements.............. (1,559) (1,039) --------- --------- Fair value of plan assets at end of year....................... $ 24,218 $ 21,288 ========= ========= Funded status: Funded status at end of year.... $ 1,299 $ (29) Unrecognized net gain from experience different from that assumed... (3,767) (736) Unrecognized prior service costs......................... 657 529 --------- --------- Net liability recognized........ $ (1,811) $ (236) ========= ========= Amounts recognized in balance sheet: Accrued liabilities............. $ (1,811) $ (236) ========= ========= Weighted average assumptions: Discount rate................... 7.25% 6.75% Long-term rate of compensation increase...................... 4.5 4.5 Long-term rate of return on plan assets........................ 9.0 9.0 Components of net periodic pension costs: 1999 1998 1997 --------- --------- --------- Service cost......................... $ 2,303 $ 2,079 $ 1,844 Interest cost........................ 1,364 1,156 1,061 Expected return on plan assets....... (1,877) (1,537) (1,339) Amortization of transition/prior service costs...................... (127) (127) (129) Amortization of actuarial loss (gain)............................. (88) (22) 113 --------- --------- --------- Net periodic pension costs........... $ 1,575 $ 1,549 $ 1,550 ========= ========= ========= 24 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Riviana provides death and additional retirement benefits to certain key employees. These plans are funded through Company-owned life insurance. The net cash surrender value of the insurance policies is recorded as a noncurrent asset in the accompanying consolidated balance sheets. The actuarially computed present value of the retirement benefits is recorded as an other noncurrent liability in the accompanying consolidated balance sheets. As of June 27, 1999, and June 28, 1998, the Company had recorded net cash surrender value of $2,267 and $1,990 and present value of retirement benefits of $1,895 and $1,700. The Company recorded expense of $155, $187 and $204 related to these plans for 1999, 1998 and 1997. Riviana has a defined contribution plan which covers substantially all United States employees. The Company contributes an amount equal to a percentage of employee contributions. Total expense related to this plan was $603, $548 and $547 during 1999, 1998 and 1997. (8) RELATED PARTY TRANSACTIONS: The Company paid $974, $935 and $1,318 for 1999, 1998 and 1997, to W. Elton Kennedy, a director of the Company, or entities controlled by him for rice purchases at market prices. Also, the Company and Kennedy Rice Dryers, Inc., a corporation of which Mr. Kennedy is the principal stockholder and a director and officer, each owns a 50% interest in South LaFourche Farm Partnership. The Company and Mr. Kennedy are each contingently liable on a $2,072 promissory note payable by the Partnership. The Company has also executed transactions with other companies owned by certain directors which were not material to the Company's results of operations or financial position. Management of the Company believes that the foregoing transactions were on terms no less favorable to the Company than could normally be obtained from unaffiliated parties. (9) COMMITMENTS AND CONTINGENCIES: LEASE COMMITMENTS At June 27, 1999, future minimum lease payments and sublease rentals under long-term operating lease obligations amounted to: GROSS SUBLEASE LEASE RENTAL NET LEASE PAYMENTS INCOME PAYMENTS --------- --------- ---------- 2000................................. $ 2,987 $ 204 $2,783 2001................................. 1,881 183 1,698 2002................................. 1,519 184 1,335 2003................................. 1,219 186 1,033 2004................................. 1,042 120 922 Thereafter........................... 2,017 72 1,945 --------- --------- ---------- Total...................... $10,665 $ 949 $9,716 ========= ========= ========== Rent expense net of rental income was $3,410, $3,311 and $2,777 for 1999, 1998 and 1997. LITIGATION Various actions and claims, which arose in the ordinary course of business, are pending against the Company. In the opinion of management, the ultimate liability, if any, which may result from these actions and claims will not materially affect the financial position or future results of operations of the Company. BUY-SELL AGREEMENT As of June 27, 1999, the Company had a $6,746 investment in Boost which represents a 49% ownership interest. The Boost stockholder agreement provides, effective in 1997, that either stockholder has 25 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) the right to purchase the other's interest. The initial bid price offered by one stockholder to the other, if not accepted, would require the rejecting stockholder to counteroffer the initial bid price plus five percent. Each rejection thereafter would also require a five percent premium over the prior offer until one stockholder accepts. (10) CAPITAL STOCK: COMMON STOCK At June 27, 1999, the Company had outstanding 1,956 shares of common stock sold before the initial public offering to directors, officers and key employees of the Company or Boost at a discount of $2,038. The amount of discount was determined by the Board of Directors and represents a percentage reduction of about 50% from the formula based estimate of fair value at the time of sale. A majority of the shares discounted were sold as an inducement for predecessor management to continue employment and to participate in the initial capitalization of the Company in 1986. The discount is recorded in the accompanying consolidated financial statements as a reduction of stockholders' equity. Under a contractual agreement with the stockholders, the discount must be repaid when the shares are sold. The Company's common stock trades on The Nasdaq Stock Market (trading symbol RVFD). PREFERRED STOCK At June 27, 1999, 5,000 shares of $1.00 per share par value preferred stock are authorized. No shares of preferred stock have been issued. (11) STOCK OPTION PLANS: On December 28, 1994, and October 22, 1997, the Company's stockholders adopted incentive stock option plans (1994 Plan and 1997 Plan). On October 11, 1995, the Company's stockholders adopted a non-employee directors stock option plan (1995 NEDSOP) which was retroactively effective May 17, 1995. Collectively, these are the "Plans". Under the 1994 Plan and 1997 Plan, a total of 795 and 1,000 shares of common stock have been reserved for issuance pursuant to options that may be granted by a committee of the Board of Directors to eligible employees of the Company or Boost, including officers. Options granted allow the holders of the options to purchase shares of common stock at the fair market value on the date of the grant for a period of ten years. No options will become exercisable sooner than one year after the date of the grant. The 1995 NEDSOP, as amended, permits the issuance of options to purchase up to 250 shares of common stock to directors who are not employees of the Company and who beneficially own less than 2% of the outstanding common stock of the Company. Such directors receive options to purchase 2 shares annually on May 17. Options granted allow holders of the options to purchase shares of common stock at the fair market value on the date of the grant for a period of ten years. No options will become exercisable sooner than one year after the date of the grant. 26 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Plans' activity is summarized below:
1999 1998 1997 ------------------ ------------------ ------------------ WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE ------ -------- ------ -------- ------ -------- Options outstanding, beginning of year............................ 721 $15.00 558 $13.74 403 $12.21 Granted.............................. 260 20.92 246 17.42 209 16.40 Exercised............................ (37) 13.91 (54) 12.53 (23) 12.00 Canceled............................. (6) 17.27 (29) 15.92 (31) 13.13 ------ ------ ------ End of year: Options outstanding................ 938 16.67 721 15.00 558 13.74 ====== ====== ====== Options exercisable................ 314 13.82 192 13.04 129 12.23 ====== ====== ====== Options outstanding price range..................... $12.00-$22.41 $12.00-$22.41 $12.00-$18.50
All options outstanding at June 27, 1999, have a weighted average remaining contractual life of 7.5 years. The Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations in accounting for options granted under the Plans. Accordingly, no expense has been recognized for stock option grants. Had expense been determined based on the Black-Scholes option pricing model value at the grant date for awards in 1999, 1998 and 1997 consistent with the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation", the Company's net income and earnings per share would have been as follows: 1999 1998 1997 --------- --------- --------- Net income: As reported..................... $ 24,255 $ 22,590 $ 20,025 Pro forma....................... 23,272 21,931 19,664 Earnings per share -- basic: As reported..................... $ 1.62 $ 1.44 $ 1.27 Pro forma....................... 1.55 1.39 1.24 Earnings per share -- diluted: As reported..................... $ 1.60 $ 1.42 $ 1.26 Pro forma....................... 1.54 1.38 1.24 The SFAS No. 123 method of accounting has not been applied to options granted prior to July 3, 1995, and the resulting pro forma compensation expense may not be indicative of pro forma expense in future years. The Black-Scholes option pricing model was used to value the grants issued in 1999, 1998 and 1997. The weighted average value and the assumptions used were as follows: 1999 1998 1997 --------- --------- --------- Weighted average value per share..... $ 8.37 $ 7.32 $ 6.92 Option term until exercised (years)............................ 7 7 7 Risk-free interest rate.............. 5.4% 6.3% 6.5% Expected dividend yield.............. 2.3% 2.4% 2.5% Volatility........................... 0.36 0.37 0.37 27 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (12) SEGMENT INFORMATION: INDUSTRY SEGMENTS The Company operates in one dominant industry segment which involves the processing, marketing and distribution of food products. GEOGRAPHIC SEGMENTS The Company classifies its business into three reportable segments: Domestic (includes the United States and Puerto Rico), Europe (includes the United Kingdom and Belgium) and Central America (includes Guatemala and Costa Rica). The Company's operations have been aggregated into these reportable segments based on similar economic characteristics and operations which are similar in nature as to product and production process, type of customer and distribution method. The Company's export sales, other than those intercompany sales reported below as sales between geographic areas, are not significant. Sales between geographic areas consist of sales of raw materials and finished food products which are sold at adjusted market prices. The Company does not derive more than 10% of its revenue from any single customer. Corporate assets consist primarily of cash, cash equivalents, marketable securities, investments in unconsolidated affiliates and other assets. 28 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company's geographic area data are as follows: 1999 1998 1997 ---------- ---------- ---------- Sales to unaffiliated customers: Domestic......................... $ 288,073 $ 279,054 $ 277,019 Europe........................... 93,542 98,690 108,315 Central America.................. 81,146 76,268 74,849 ---------- ---------- ---------- Total consolidated.......... $ 462,761 $ 454,012 $ 460,183 ========== ========== ========== Sales between geographic areas: Domestic......................... $ 850 $ 872 $ 1,552 Central America.................. 14,737 11,253 9,384 Eliminations..................... (15,587) (12,125) (10,936) ---------- ---------- ---------- Total consolidated.......... $ 0 $ 0 $ 0 ========== ========== ========== Income: Operating income: Domestic......................... $ 28,735 $ 26,254 $ 27,140 Europe........................... 3,002 3,319 2,455 Central America.................. 10,192 10,493 9,865 ---------- ---------- ---------- Total operating income...... 41,929 40,066 39,460 General corporate expenses....... (9,519) (9,198) (9,406) ---------- ---------- ---------- Income from operations........... 32,410 30,868 30,054 Interest expense................... (1,039) (619) (2,002) Equity in earnings of unconsolidated affiliates.......... 1,142 1,363 796 Other income, net.................. 2,710 1,321 1,074 ---------- ---------- ---------- Income before income taxes and minority interests............ $ 35,223 $ 32,933 $ 29,922 ========== ========== ========== Identifiable assets at end of year: Domestic......................... $ 117,460 $ 116,393 $ 112,017 Europe........................... 30,336 31,461 31,131 Central America.................. 41,244 37,813 36,687 ---------- ---------- ---------- Total identifiable assets... 189,040 185,667 179,835 Corporate assets................. 11,164 19,661 12,054 ---------- ---------- ---------- Total assets................ $ 200,204 $ 205,328 $ 191,889 ========== ========== ========== Long lived assets: Domestic......................... $ 71,423 $ 67,726 $ 63,844 Europe........................... 9,207 8,962 9,970 Central America.................. 13,978 15,027 12,388 ---------- ---------- ---------- Total consolidated.......... $ 94,608 $ 91,715 $ 86,202 ========== ========== ========== Depreciation and amortization: Domestic......................... $ 3,724 $ 2,763 $ 3,217 Europe........................... 178 134 157 Central America.................. 1,437 1,171 1,339 Corporate........................ 375 438 515 ---------- ---------- ---------- Total consolidated.......... $ 5,714 $ 4,506 $ 5,228 ========== ========== ========== Capital expenditures: Domestic......................... $ 6,489 $ 5,983 $ 18,252 Europe........................... 631 128 70 Central America.................. 2,182 5,061 3,531 Corporate........................ 169 326 178 ---------- ---------- ---------- Total consolidated.......... $ 9,471 $ 11,498 $ 22,031 ========== ========== ========== Investment in unconsolidated affiliates: Europe........................... $ 7,883 $ 7,957 $ 8,923 Corporate........................ 2,075 2,173 1,892 ---------- ---------- ---------- Total consolidated.......... $ 9,958 $ 10,130 $ 10,815 ========== ========== ========== 29 RIVIANA FOODS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (13) UNAUDITED QUARTERLY FINANCIAL DATA:
QUARTERS ENDED ------------------------------------------------ SEPTEMBER DECEMBER MARCH JUNE YEAR ---------- --------- ---------- ---------- ---------- 1999 Net sales....................... $ 107,322 $ 122,484 $ 118,487 $ 114,468 $ 462,761 Gross profit.................... 27,889 37,813 34,885 33,779 134,366 Income before income taxes and minority interests............ 6,460 10,161 9,054 9,548 35,223 Net income...................... 4,401 7,029 6,318 6,507 24,255 Per share: Earnings: Basic................... .28 .47 .43 .44 1.62 Diluted................. .28 .47 .42 .44 1.60 Cash dividends paid........ .11 .11 .125 .125 .47 Market price: High.................... 23.625 25.750 24.750 23.875 25.750 Low..................... 19.375 18.750 17.625 18.000 17.625 1998 Net sales....................... $ 108,014 $ 121,472 $ 114,068 $ 110,458 $ 454,012 Gross profit.................... 27,358 37,011 32,461 32,263 129,093 Income before income taxes and minority interests............ 6,144 9,272 8,221 9,296 32,933 Net income...................... 3,924 6,408 5,868 6,390 22,590 Per share: Earnings: Basic................... .25 .41 .37 .41 1.44 Diluted................. .25 .40 .37 .40 1.42 Cash dividends paid........ .10 .10 .11 .11 .42 Market price: High.................... 21.000 21.000 22.500 25.000 25.000 Low..................... 17.250 18.750 19.750 21.500 17.250
Earnings per share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings per share may not equal the annual earnings per share. 30 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of Riviana Foods Inc.: We have audited the accompanying consolidated balance sheets of Riviana Foods Inc. (a Delaware corporation) and subsidiaries as of June 27, 1999, and June 28, 1998, and the related consolidated statements of income, capital accounts and retained earnings, consolidated statements of comprehensive income and accumulated other comprehensive income and cash flows for each of the three fiscal years in the period ended June 27, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Riviana Foods Inc. and subsidiaries as of June 27, 1999, and June 28, 1998, and the results of their operations and their cash flows for each of the three fiscal years in the period ended June 27, 1999, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Houston, Texas August 10, 1999 31 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There is nothing to be reported under this item. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information relating to the Directors of the Company is set forth under the captions "General" and "The Company recommends Voting "FOR" the nominees" in the Proxy Statement and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. Information relating to executive compensation is set forth under the captions "Compensation Tables" and "Retirement Plan" in the Proxy Statement and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information relating to the ownership of equity securities of the Company by certain beneficial owners and management is set forth under the caption "Common Stock Outstanding and Principal Holders Thereof" in the Proxy Statement and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information relating to certain relationships with a beneficial stockholder and certain related transactions is set forth under the captions "Compensation and Stock Option Committee Interlock and Insider Participation" and "Certain Transactions" in the Proxy Statement and is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) (1) Consolidated Financial Statements: - See Index to Consolidated Financial Statements on page 12. (2) Consolidated Financial Statement Schedules - None. (3) Exhibits required to be filed by Item 601 of Regulation S-K are listed below and are filed as a part hereof. Documents not designated as being incorporated herein by reference are filed herewith. The paragraph numbers correspond to the exhibit numbers designated in Item 601 of Regulation S-K. 3(i) The Company's Restated Certificate of Incorporation dated December 28, 1994, is incorporated herein by reference to Exhibit 3.01 to the Company's Registration Statement on Form S-1, NO. 33- 87838 under the Securities Act of 1933, as amended (the "Registration Statement") 3(ii) The Company's By-laws, as amended effective May 17, 1995, is incorporated herein by reference to Exhibit 3(ii) to the Company's Annual Report on Form 10-K for the fiscal year ended July 2, 1995 * 10(i) Consulting Agreement between Riviana Foods Inc. and Frank A. Godchaux III dated January 1, 1996, is incorporated herein by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996 * 10(ii) Consulting Agreement between Riviana Foods Inc. and Charles R. Godchaux dated July 1, 1994, is incorporated herein by reference to Exhibit 10.02 to the Registration Statement * 10(iii) Benefit Restoration Plan is incorporated herein by reference to Exhibit 10.03 to the Registration Statement * 10(iv) Management Security Agreement between the Registrant and Joseph A. Hafner, Jr. dated July 17, 1989, is incorporated herein by reference to Exhibit 10.04 to the Registration Statement 10(v) Shareholders Agreement between Sun-Land Products of California and Stevens & Brotherton Ltd. dated March 24, 1994, is incorporated herein by reference to Exhibit 10.05 to the Registration Statement 10(vi) Shareholder Agreement among N&C Boost N.V., Arrocerias Herba, S.A. and Ricegrowers' Co- Operative Limited dated January 29, 1992, is incorporated herein by reference to Exhibit 10.06 to the Registration Statement 10(vii) Stock Purchase Agreement by and among N&C Boost N.V., Riceherba International Inc. and Ricegrowers' Co-Operative Limited dated as of January 29, 1992, is incorporated herein by reference to Exhibit 10.07 to the Registration Statement 10(viii) Shareholder Agreement among N&C Boost N.V., Arrocerias Herba, S.A. and Herto B.V.B.A. dated January 1, 1991, as amended, is incorporated herein by reference to Exhibit 10.08 to the Registration Statement 10(ix) Agreement of Partnership between Riviana Foods Inc. and Kennedy Rice Dryers, Inc. dated February 12, 1990, is incorporated herein by reference to Exhibit 10.09 to the Registration Statement 10(x) Partnership Agreement between Riviana Foods Inc. and Riceland Foods Inc. dated March 22, 1989, is incorporated herein by reference to Exhibit 10.10 to the Registration Statement * 10(xi) 1994 Stock Option Plan is incorporated herein by reference to Exhibit 10.11 to the Registration Statement * 10(xii) Amendment and Restatement of Executive Officer's Stock Purchase Agreement between Riviana Foods Inc. and W. David Hanks dated December 15, 1994, is incorporated herein by reference to Exhibit 10.12 to the Registration Statement * 10(xiii) Amendment and Restatement of Executive Officer's Stock Purchase Agreement between Riviana Foods Inc. and Jack M. Nolingberg dated December 15, 1994, is incorporated herein by reference to Exhibit 10.13 to the Registration Statement * 10(xiv) Amendment and Restatement of Executive Officer's Stock Purchase Agreement between Riviana Foods Inc. and Robert D. Watts dated December 15, 1994, as amended, is incorporated herein by reference to Exhibit 10.14 to the Registration Statement * 10(xv) Director's Stock Purchase Agreement between Riviana Foods Inc. and W. Elton Kennedy dated March 27, 1986, is incorporated herein by reference to Exhibit 10.15 to the Registration Statement *10(xvi) Amended and Restated 1995 Non-Employee Director Stock Option Plan dated May 17, 1996, is incorporated herein by reference to Exhibit 10(xvi) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996 *10(xvii) Amendment of Amendment and Restatement of Executive Officer's Stock Purchase Agreement dated December 15, 1994, between Riviana Foods Inc. and W. David Hanks dated November 8, 1996 *10(xviii) Amendment of Amendment and Restatement of Executive Officer's Stock Purchase Agreement dated December 15, 1994, between Riviana Foods Inc. and Jack M. Nolingberg dated November 8, 1996 *10(xviv) Amended and Restated 1997 Stock Option Plan dated September 1, 1997, is incorporated herein by reference to Exhibit 10(xviv) to the Company's Annual Report on Form 10-K for the fiscal year ended June 28, 1998 21. A list of the subsidiaries of the Registrant is incorporated herein by reference to Exhibit 21.01 to the Registration Statement 23. The following Exhibit is filed by incorporation by reference to Item 14(a)(2) of this Report: (a) Consent of Arthur Andersen LLP 24. Powers of Attorney of the Company's directors (b) None - --------------------------- * A management contract, compensatory plan or arrangement SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on September 20, 1999. RIVIANA FOODS INC. (Registrant) By /S/ JOSEPH A. HAFNER, JR. JOSEPH A. HAFNER, JR. CHIEF EXECUTIVE OFFICER Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, on September 20, 1999. SIGNATURE CAPACITY --------- -------- /S/ JOSEPH A. HAFNER, JR. Chief Executive Officer, President and JOSEPH A. HAFNER, JR. Director (Principal Executive Officer) /S/ W. DAVID HANKS Executive Vice President and Director W. DAVID HANKS /S/ E. WAYNE RAY, JR. Vice President, Chief Financial Officer, E. WAYNE RAY, JR. Treasurer and Director (Principal Financial and Accounting Officer) *Frank A. Godchaux III Chairman of the Board *Charles R. Godchaux Vice Chairman of the Board *Theresa G. Payne Director *W. Elton Kennedy Director *E. James Lowrey Director *Patrick W. Rose Director *Thomas B. Walker, Jr. Director *Mary Godchaux Wieck Director *By /S/ ELIZABETH B. WOODARD ELIZABETH B. WOODARD (AS ATTORNEY-IN-FACT FOR EACH OF THE PERSONS INDICATED) EX-23 2 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report, dated August 10, 1999, included in this Form 10-K, into the Company's previously filed Form S-8 Registration Statements (File No. 333-40865, 333-15843 and 333-02484) and the Company's previously filed Form S-3 Registration Statement (File No. 333-17901). ARTHUR ANDERSEN LLP Houston, Texas September 20, 1999 EX-24 3 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in his capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ FRANK A. GODCHAUX III ---------------------------------------- Frank A. Godchaux III, Chairman of the Board of Directors POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in his capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ CHARLES R. GODCHAUX ---------------------------------------- Charles R. Godchaux, Vice Chairman of the Board of Directors POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in her name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in her capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ THERESA G. PAYNE --------------------------------------- Theresa G. Payne, Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in his capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ W. ELTON KENNEDY --------------------------------------- W. Elton Kennedy, Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in his capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ PATRICK W. ROSE ---------------------------------------- Patrick W. Rose, Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in his capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ E. JAMES LOWREY ---------------------------------------- E. James Lowrey, Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in his name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in his capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ THOMAS B. WALKER, JR. ---------------------------------------- Thomas B. Walker, Jr., Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Riviana Foods Inc. (the "Company") hereby constitutes and appoints Elizabeth B. Woodard as Attorney-in-Fact in her name, place and stead to execute the Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999, together with any and all subsequent amendments thereof, in her capacity as Director and hereby ratifies all that said Attorney-in-Fact may do by virtue thereof. September 20, 1999 /S/ MARY G. WIECK ---------------------------------------- Mary G. Wieck, Director EX-27 4
5 THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RIVIANA FOODS INC.'S FORM 10K FOR FISCAL 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS JUN-27-1999 JUN-27-1999 5,605 3,366 42,079 1,386 46,570 105,596 121,914 44,579 200,204 52,674 0 0 0 15,883 114,494 200,204 462,761 462,761 328,395 101,956 2,813 0 (1,039) 35,223 10,592 24,255 0 0 0 24,255 1.62 1.60
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