RIVIANA FOODS INC /DE/ - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-Q

(Mark One)

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
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Commission File Number 0-25294

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RIVIANA FOODS INC.
(Exact name of Registrant as specified in its charter)

DELAWARE 76-0177572
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

2777 ALLEN PARKWAY
HOUSTON, TX 77019
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (713) 529-3251

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act).

Yes [X] No [ ]

The number of shares of Common Stock of the Registrant, par value $1.00
per share, outstanding at May 5, 2003, was 14,300,216.

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RIVIANA FOODS INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 30, 2003

INDEX

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of
these consolidated financial statements.

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RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

The accompanying notes are an integral part of
these consolidated financial statements.

2

RIVIANA FOODS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

The accompanying notes are an integral part of
these consolidated financial statements.

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RIVIANA FOODS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(In Thousands, Except Per Share Amounts)
(Unaudited)

1. Basis for Preparation of the Consolidated Financial Statements

The consolidated financial statements have been prepared by
Riviana Foods Inc. and subsidiaries ("the Company"), without audit, with the
exception of the June 30, 2002, consolidated balance sheet. The financial
statements include consolidated balance sheets, consolidated statements of
income and consolidated statements of cash flows. Certain amounts in the prior
year have been reclassified to conform to the current year presentation. In the
opinion of management, all adjustments, which consist of normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and cash flows for all periods presented have been made.

The financial statements should be read in conjunction with
the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the fiscal year ended June 30, 2002.

The Company's fiscal year is based on the 52/53-week period
ending on the Sunday closest to June 30th of each year. Both fiscal 2003 and
2002 are 52-week periods.

2. Earnings per Share

Basic and diluted earnings per share are computed by dividing
net income by the respective number of weighted average common shares
outstanding. The reconciliation of weighted average common shares outstanding
used in computing basic and diluted earnings per share is as follows:

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3. Inventories

Inventories were composed of the following:

4. Comprehensive Income

The components of comprehensive income were as follows:

5. Segment Information

6. Accounting Principles

Effective July 1, 2002, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 141, "Business Combinations", and SFAS
No. 142, "Goodwill and Other Intangible Assets". In addition to requiring the
use of the purchase method for all business combinations, SFAS No. 141 requires
intangible assets that meet certain criteria to be recognized as assets apart
from goodwill. SFAS No. 142 addresses accounting and reporting standards for
acquired goodwill and other intangible assets, and generally requires that
goodwill and indefinite life intangible assets no longer be amortized but be
tested for impairment annually. Finite life intangible assets will continue to
be amortized over their useful lives. As of July 1, 2002, the Company completed
the required impairment tests of goodwill and other intangible assets with
indefinite lives and, based on the results of the tests, determined no
impairment to the carrying values of these assets was needed. In accordance with
SFAS No. 142, prior period amounts were not restated. For the nine months ended
March 31, 2002, amortization net of taxes of indefinite life intangibles was
$34. Had the prior period been restated, the effect of adopting this statement
would have had no material effect on the Company's results of operations or
financial position. The net carrying value of goodwill and other indefinite life
intangibles as of March 30, 2003 was $9,310 and $1,604.

Effective July 1, 2002, the Company adopted SFAS No. 143,
"Accounting for Asset Retirement Obligations". SFAS No. 143 addresses accounting
and reporting for legal obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The effect of
adopting this statement had no material impact on the Company's results of
operations or financial position.

Effective July 1, 2002, the Company adopted SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". This
pronouncement establishes the methods of accounting for the impairment or
disposal of long-lived assets by sale or otherwise. The effect of adopting this
statement had no material impact on the Company's results of operations or
financial position.

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Effective December 30, 2002, the Company adopted SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." This
statement broadens the presentation of discontinued operations to include more
disposal transactions and restructurings planned and controlled by management
that materially change the scope of the business or the manner in which that
business is conducted. This statement is effective for business exit or disposal
activities initiated after December 31, 2002. The effect of adopting this
statement had no material impact on the Company's results of operations or
financial position.

Effective December 30, 2002, the Company adopted Financial
Accounting Standards Board Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". This interpretation will significantly change current
practice in the accounting for, and disclosure of, guarantees. Guarantees
meeting the characteristics described in the interpretation are required to be
initially recorded at fair value, which is different from general current
practice of recognition of a liability only when loss is probable and reasonably
estimable, as prescribed in SFAS No. 5, "Accounting for Contingencies". The
interpretation also requires a guarantor to make significant new disclosures for
virtually all guarantees even if the likelihood of the guarantor's having to
make payments under the guarantee is remote. The disclosure requirements in this
interpretation were effective for financial statements of interim or annual
periods ending after December 15, 2002. The initial recognition and initial
measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The adoption of
this interpretation did not have a material impact on the Company's financial
position or results of operations.

7. Stock-Based Compensation

SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure", was issued in December 2002. This
statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to
provide alternative methods of transition to Statement 123's fair value method
of accounting for stock-based compensation. The Company has elected to follow
the intrinsic value method in accounting for its employee stock options in
accordance with APB 25, "Accounting for Stock Issued to Employees". Accordingly,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized.

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Had expense been determined based on the Black Scholes option
pricing model at the grant date for awards in 2003 and 2002 consistent with the
provisions of SFAS No. 123, the Company's net income and earnings per share
would have been as follows:

8. Business Acquisition

Effective February 10, 2003, the Company purchased all of the
Rice Specialties business of ACH Food Companies, Inc. ("ACH") for about $25.3
million. The business located in Brinkley, Arkansas, and Mobile, Alabama,
manufactures and sells a variety of rice products including quick-cooking rice
for the U.S. food manufacturing, retail and foodservice industry. The results of
operations are included in the Company's financial statements beginning February
10, 2003. The purchase price and the allocation to assets acquired have not been
finalized pending the completion of appraisals of fixed and intangible assets
and arbitration related to the value of inventory acquired.

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ITEM 2. 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.

BUSINESS ACQUISITION

Effective February 10, 2003, the Company purchased all of the Rice
Specialties business of ACH Food Companies, Inc. (ACH) for about $25.3 million.
The business located in Brinkley, Arkansas, and Mobile, Alabama, manufactures
and sells a variety of rice products including quick cooking rice for the U. S.
food manufacturing, retail and foodservice industry. The results of operations
are included in the Company's financial statements beginning February 10, 2003.
The purchase price and the allocation to assets acquired has not been finalized
pending the completion of appraisals of fixed and intangible assets and
arbitration related to the value of inventory acquired.

RESOLUTION OF TAX MATTER

The results of operations for the nine months ended March 30, 2003
included $1.4 million, or $0.10 per diluted share, net of minority interest of
$0.1 million, reduction in tax expense due to the favorable resolution of a
foreign tax matter in the previous fiscal quarter. For the nine months ended
March 31, 2002, the results of operations included $0.8 million, or $0.06 per
diluted share, net of minority interest of $0.1 million, related to reduction in
tax expense due to the favorable resolution of a foreign tax matter in the
second fiscal quarter. The current year reduction in tax involved investment tax
credits related to the capital investments made by the Company in Fiscal 1998
and the prior year reduction was related similarly to capital investments made
by the Company in Fiscal 1997. The Company did not record the benefit
attributable to these credits while their availability was uncertain; however,
the matter has now been resolved in favor of the Company.

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. Both three-month and nine-month periods
ended March 30, 2003 and March 31, 2002 covered 13 weeks and 39 weeks of
operations.

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

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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. 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.

ACCOUNTING POLICIES

The following accounting policies are integral to understanding the
financial statements contained herein reporting the operating results and
financial position of the Company for the three months and nine months ended
March 30, 2003 with comparative results for the previous year.

ACCOUNTING ESTIMATES AND ASSUMPTIONS

Certain estimates and assumptions are used in preparing the financial
statements presented herein and affect the reported amounts and disclosures.
Estimates are used when accounting for certain consumer and trade promotions,
depreciation and amortization, employee benefits contingencies and asset
valuation allowances. For example, in determining the expense related to
consumer coupons, the Company estimates the percentage of coupons that will be
redeemed based on historical results for similar items. The Company is also
subject to risks and uncertainties that could cause actual results to be
different from estimated results such as changes in market conditions,
competition, foreign exchange rates, legislation, accounting rules and
litigation. Actual results could differ from those estimates. Those items are
discussed in more detail in the section entitled "Forward Looking Information
and Factors that May Affect Future Results."

REVENUE RECOGNITION

Sales are recognized at the time the risk of ownership passes to the
customer. Generally this occurs when products are shipped to trade customers. On
sales where the risk of ownership transfers upon delivery to the customer, sales
are recorded when delivery occurs.

SALES INCENTIVES

Certain sales incentives such as coupons, rebates and free products
which are offered to either the retail trade or the consumer are recorded as a
reduction in sales revenue in accordance with recent accounting pronouncements
at the later of either the date the related revenue is recorded or the date at
which the sales incentive is offered.

CASH DISCOUNTS

An estimate of cash discounts offered to customers for early payment of
sales invoices is recorded in the same period the related sales are recorded.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

In the normal course of business the Company extends credit to its
customers. The Company regularly reviews these accounts and makes a provision
for amounts that may become uncollectible. The

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Company regularly evaluates accounts receivable and the allowance for doubtful
accounts based on historical loss experience, specific problem accounts and
general economic conditions in its geographic markets, and adjustments to the
allowance are charged or credited to income. Although the Company believes the
allowance is adequate to provide for potential uncollectible accounts there is a
possibility that actual losses will differ from the amount estimated.

CONTINGENCIES

The Company is subject to certain contingencies including but not
limited to legal issues, and claims covering product liability, environmental,
tax and employment matters. The Company records accruals for such contingencies
based on its assessment of the probability of occurrence and an estimate of the
potential liability. In arriving at the liability to be recorded, it considers
past history, where applicable, and the available facts surrounding each issue.
Reserves are provided if the Company thinks it likely that a taxing authority
may take a sustainable position on a matter contrary to the position taken by
the Company or one of its subsidiaries.

FORWARD-LOOKING INFORMATION AND FACTORS THAT MAY AFFECT FUTURE RESULTS

The Securities and Exchange Commission encourages the disclosure of
forward-looking information in order for investors to better understand the
Company and enable more informed investment decisions. From time-to-time the
Company does make oral and written statements that contain forward-looking
statements. The Company tries to identify such statements with the use of words
such as "estimate", "expect", "project", "intend", "plan", "believe", and other
similar terms.

Factors that could cause actual results to differ materially are the
following:

o Changes in business, political and worldwide economic conditions

o Competitive market activity

o Change in product mix sold

o Trade buying patterns

o Litigation

o Interest rate and foreign currency exchange rate fluctuations

o Governmental laws and regulations including tax laws

o Change in generally accepted accounting policies

o Acts of God affecting manufacturing and distribution channels

o Acquisitions, divestitures and restructurings

The Company cannot guarantee that any forward-looking statement will be
realized, but makes every effort to be prudent in its plans and assumptions.
Should known or unknown risks materialize, or should underlying assumptions be
inaccurate, actual results may vary materially from those estimated or
projected.

The Company does not undertake to publicly update forward-looking
statements as a result of new information, future events or otherwise.

This discussion of factors that could affect future results is not meant to
be complete but instead is designed to highlight important factors that may
impact the Company's future results.

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RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 30, 2003
COMPARED TO THREE MONTHS ENDED MARCH 31, 2002

For the three months ended March 30, 2003 sales increased $6.9 million
or 7.4% to $99.4 million from $92.5 million for the previous fiscal year. Higher
unit volumes increased sales by $7.8 million while the combined effect of price
and sales mix decreased sales by $1.3 million. Favorable currency translation
increased sales $0.4 million. In the domestic rice business sales of $62.8
million increased $3.2 million or 5.4% from the prior year sales of $59.6
million. Unit volumes increased 18.3% and added $6.3 million to sales. A
combination of lower prices and sales mix reduced sales by $3.1 million. Total
retail unit volumes increased by 3.2% and non-retail unit volumes, excluding
by-products, increased by 60.5%. In the non-retail sector, foodservice,
industrial specialty and export/commodity volumes increased 29.0%, 58.8% and
73.9%, respectively. The volume increases reported by the industrial specialty
and export/commodity sectors were favorably impacted by the acquisition of the
ACH Food Companies, Inc. rice specialties business. Sales by the Company's
energy co-generation joint venture increased $0.3 million or 21.0% to $1.5
million. This increase was directly related to the increase in natural gas
prices. Sales in Central America increased $1.2 million or 5.6% to $21.7 million
compared to $20.5 million in the prior year. Unit volume sales of fruit nectar
and juice products increased by 6.1%. Unit volume sales of cookie and cracker
products were impacted by increased competitive activity and sales price
increases and declined 2.7%. In total, the increase in volumes added $0.6
million to sales. Price increases increased sales by $1.6 million and
unfavorable currency translation reduced sales by $1.0 million. In Europe, sales
increased $2.2 million or 20.1% to $13.4 million from $11.2 million in the prior
year. Higher unit volumes increased sales by $0.9 million. A combination of
price and product mix reduced sales by $0.1 million and favorable currency
translation increased sales by $1.4 million.

Gross profit increased $0.5 million or 1.6% to $27.6 million from $27.1
million a year earlier and decreased as a percentage of sales to 27.8% from
29.3%. In the domestic rice business, gross profit decreased $0.6 million or
3.2% to $19.0 million from $19.6 million in the same period in the prior year
and decreased as a percentage of sales to 30.2% from 32.9%. Gross profit
declined primarily as a result of sales mix reflecting lower sales in the
value-added categories of quick cooking rice and prepared rice mixes. The
domestic energy co-generation operations reported a loss at the gross profit
level of $0.1 million versus a profit of $0.1 million in the prior year. Gross
profit in Central America increased $1.0 million to $7.2 million and increased
as a percentage of sales to 33.3% from 30.5% in the prior year. The increase in
gross profit was related to the increase in sales, sales price increases and
improved operating efficiencies. In Europe gross profit increased by $0.3
million or 19.5% to $1.5 million, and, as a percentage of sales, was even with
the prior year at 10.9%. The increase in gross profit was due to the increase in
sales.

Advertising, selling and warehousing expenses decreased $0.1 million to
$13.1 million. A decrease of $0.8 million in the domestic rice business was
partially offset by an increase of $0.2 million in Central America and $0.5
million in Europe. The increase reported in Central America was related to
competitive markets and expanded distribution. In Europe, the increase was
related to increased distribution activity and an increase in pension plan
benefit costs. In Europe, in the prior year, the Company had a favorable
adjustment to pension expense which was not repeated in the current year.

Administrative and general expenses increased by $0.6 million or 10.4%
to $5.9 million from $5.3 million in the prior period. Administrative and
general expenses increased in the domestic rice business, Central America and
Europe by $0.2 million, $0.2 million and $0.3 million, respectively. The
increase in Europe was primarily related to an increase in pension plan expense
as noted above. In the prior year, administrative and general expenses were
reduced by a one-time favorable adjustment to pension expense relative to its
European operations.

Operating income was even with the prior year at $8.6 million. As a
percentage of sales, operating income decreased to 8.6% from 9.3% in the prior
period. Operating income in the domestic rice business was even with the prior
year at $8.8 million as the decline in gross profit was offset by a decline in

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advertising, selling and warehousing expenses. In Central America, operating
income increased $0.5 million or 27.7% to $2.5 million due to higher gross
profit as discussed previously offset partially by increased advertising,
selling and warehousing expenses and higher administrative expenses. Operating
income in Europe decreased $0.5 million to $0.2 million. The $0.3 million
increase in gross profit was offset by higher advertising, selling and
warehousing and administrative expenses.

Other income of $0.9 million increased by $0.7 million from the prior
year. In the current period the Company recorded net interest income of $0.2
million which was even with the prior year. Equity in the earnings of
unconsolidated affiliates of $1.0 million was $0.4 million higher than the same
period in the prior year due improved earnings from its affiliate, Boost
Nutrition. This affiliate, which manufactures and sells rice in Belgium and
Germany, recorded strong volume gains in both countries. Other miscellaneous
expenses decreased by $0.3 million to $0.3 million primarily due to the
settlement of a dispute regarding a mineral lease.

Income tax expense of $2.8 million was $0.1 million higher than in the
same period in the prior year. The effective rate decreased to 29.2% from 30.2%
in the same period last year. The effective tax rate is less than the U.S.
statutory rate primarily as a result of foreign earnings which are subject to
tax rates that are lower than the U.S. statutory rate and the utilization of tax
credits.

Net income for the quarter ending March 30, 2003 increased $0.6 million
or 10.4% to $6.7 million from $6.1 million in the prior fiscal year. Diluted
earnings per share were $0.46, up from $0.43 in the same quarter last year.

NINE MONTHS ENDED MARCH 30, 2003
COMPARED TO NINE MONTHS ENDED MARCH 31, 2002

For the nine months ended March 30, 2003 sales increased $8.5 million
or 3.0% to $292.8 million from $284.3 million for the previous fiscal year.
Higher volumes increased sales $12.7 million and the combined effect of price
and sales mix decreased sales by $5.3 million. Favorable currency translation
increased sales by $1.1 million. In the domestic rice business, sales of $182.2
million decreased $0.7 million or 0.4% from the prior year sales of $182.9
million. In total, higher unit volumes increased sales by $5.4 million and
product mix decreased sales by $6.1 million. The Company's energy co-generation
joint venture sales increased $0.3 million or 9.0% to $3.6 million from $3.3
million last year primarily due to higher natural gas prices. Sales in Central
America increased $3.8 million or 6.1% to $66.3 million compared to $62.5
million in the prior year. Higher volumes were recorded in fruit nectar and
juice products and cookie and crackers. In total, higher volumes increased sales
by $4.2 million. Higher prices increased sales by $2.1 million and unfavorable
currency translation reduced sales by $2.5 million. In Europe, sales increased
$5.1 million or 14.4% to $40.7 million from $35.6 million in the prior year.
Higher unit volumes increased sales by $2.8 million. A combination of price and
product mix reduced sales by $1.3 million and favorable currency translation
increased sales by $3.6 million.

Gross profit increased by $1.7 million or 2.2% to $82.8 million from
$81.1 million a year earlier and decreased slightly as a percentage of sales to
28.3% from 28.5%. In the domestic rice business, gross profit increased $0.3
million or 0.5% to $57.6 million from $57.3 million in the same period in the
prior year. Gross profit increased primarily as a result of lower rice costs in
the first quarter of the current fiscal year. In the domestic rice business,
gross profit as a percentage of sales increased to 31.6% from 31.3% last year.
The domestic energy co-generation operations reported a loss at the gross profit
level of $0.2 million which was slightly more than the $0.1 million loss
reported in the prior year. Gross profit in Central America improved by $1.2
million or 5.8% to $21.1 million but decreased minimally as a percentage of
sales to 31.8% from 31.9% in the prior year. The gross profit increase followed
the increased sales as noted previously. In Europe gross profit increased by
$0.4 million or 9.6% to $4.3 million, and decreased as a percentage of sales to
10.6% from 11.0% in the prior year primarily as a result of competitive market
conditions.

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Advertising, selling and warehousing expenses of $38.4 million
decreased $1.7 million from the corresponding period in the prior year. A
decrease of $2.9 million in the domestic rice business was partially offset by
an increase of $0.6 million in Central America and $0.6 million in Europe.

Administrative and general expenses increased by $1.7 million or 10.6%
to $17.9 million from $16.2 million in the prior period. In total, pension plan
costs increased by $0.5 million due to higher current year cost and in the prior
year, the company recorded a one-time favorable adjustment to pension expense
related to its European operations. Legal expenses increased by $0.3 million and
startup expenses related to the Company's new distribution business in Panama
increased $0.2 million. The balance of the increase in administrative and
general expenses is related to normal salary increases and higher health care
plan costs.

Operating income increased $1.7 million or 6.9% to $26.5 million from
$24.8 million in the same period in the prior year. As a percentage of sales,
operating income increased to 9.1% from 8.7% in the prior period. The increase
in operating income was principally due to increased operating income in the
domestic rice business. Operating income in the domestic rice business increased
by $2.7 million or 11.2% to $27.2 million. In Central America, operating income
increased $0.2 million or 2.5% to $7.3 million. Operating income in Europe
decreased $0.6 million to $0.7 million from $1.3 million last year.

Other income of $1.8 million increased by $1.1 million from the prior
year. Net interest income of $0.7 million increased $0.3 million over the prior
year's $0.4 million. Equity in the earnings of unconsolidated affiliates of $2.1
million was $0.3 million higher than the same period in the prior year due
increased earnings from its affiliate, Boost Nutrition C.V., its European rice
joint venture. Other miscellaneous expenses decreased by $0.5 million to $1.0
million due primarily to the settlement of a mineral lease dispute.

Income tax expense of $6.6 million reflected a decrease of $0.1 million
from the same period in the prior year notwithstanding an increase of $2.9
million in income before tax. The effective rate for the nine months ended March
30, 2003 declined to 23.2% from 26.3% in the same period in the prior year. The
effective tax rates for both periods are less than the U.S. statutory rate
primarily as a result of foreign earnings which are subject to tax rates that
are lower than the U.S. statutory rate, the utilization of tax credits and the
resolution of a foreign tax matter in the second fiscal quarter as discussed
previously.

Net income for the nine months ended March 30, 2003 increased $2.9
million or 15.7% to $21.5 million from $18.6 million in the prior fiscal year.
Diluted earnings per share were $1.48, up from $1.31 in the prior period.

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended March 30, 2003 cash of $12.8 million was
provided by operating activities. In the prior year, cash of $15.5 million was
provided by operating activities. The increase in net income and non-cash
charges for depreciation and amortization provided an additional $3.5 million as
compared to results for the prior year. Cash was used to increase working
capital by $12.4 million while in the prior year $4.8 million was used to
increase working capital. Other assets increased by $2.7 million in the current
year as compared to an increase of $3.8 million in the prior year. Equity in the
earnings of unconsolidated affiliates increased $0.3 to $2.1 million from $1.8
million in the corresponding period last year.

Cash used in investing activities increased $27.2 million to $33.8
million as compared to cash used in investing activities in the prior year of
$6.6 million. The Company used $25.3 million to purchase the rice specialties
business of ACH Food Companies, Inc. in the current fiscal quarter. Additions to
property, plant and equipment in the current period totaled $8.8 million, an
increase of $2.3 million from the comparable period last year.

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Cash of $16.8 million was provided by financing in the period ended
March 30, 2003. In the prior year, cash of $9.6 million was used in financing
activities. In the current year a net increase in short and long-term debt of
$21.9 million provided cash while in the prior year the Company used $3.9
million to decrease net debt. The increase in the level of debt was related to
the Company's purchase of the rice specialties business from ACH Food Companies,
Inc. in February of the current year. Funds used for dividend payments increased
by $0.3 million in the current year. Cash provided from sale of common stock
through the exercise of employee stock options increased to $1.9 million from
$1.0 million in the same period last year.

On October 16, 2002 the Company's board of directors raised the
quarterly dividend on the Company's common stock to $0.17 per share from $0.165
per share, for an indicated annual rate of $0.68 per share.

As of March 30, 2003, the board of directors of the Company had
authorized the open-market repurchase, from time to time, of up to 3.0 million
shares of the Company's common stock. The repurchased stock will be used for
general corporate purposes including issuance of stock under employee stock
option plans. For the nine months ended March 30, 2003, the Company did not
repurchase any shares. Through March 30, 2003, the Company has repurchased a
total of 2.0 million shares and 431 thousand shares have been reissued upon
exercise of employee stock options.

The Company is a co-guarantor of a term loan by a foreign bank made to
its unconsolidated affiliate, Herto N.V., a Belgian company engaged in the
manufacture and sale of rice cakes. The terms of the loan agreement provide for
a maximum credit available to Herto N.V. of E7.5 million (or $8.1 million)
reducing over the term with a final maturity in 2008. The Company has provided
the bank with an unconditional guarantee for an amount not to exceed 50% of the
maximum credit facility of E7.5 million. The Company has an indemnity
agreement from one of the other three shareholders of Herto N.V. which provides
that the Company would be reimbursed for 33 1/3% of any payment it was required
to make under the terms of the guarantee.

Also, the Company and Kennedy Rice Dryers, Inc., a corporation of which
Mr. Elton Kennedy, a director of the Company, 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 $2.0
million promissory note payable by the Partnership.

The Company has a $35.0 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 Libor
rate plus 0.625%. At March 30, 2003, the Company had $22.0 million in loans
outstanding used for the acquisition of the rice specialties business from ACH
Food Companies, Inc. and $2.1 million in letters of credit outstanding under
this credit facility. This facility will expire in fiscal 2003 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 holds a portfolio of marketable securities with a market
value of $0.1 million at March 30, 2003 which is available to provide additional
liquidity.

The Company's financial position remains strong and 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.

LEGAL MATTERS

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.

15

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As of March 30, 2003 there have been no material changes in the
Company's market risk exposure as described in Management's Discussion and
Analysis contained in the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 2002.

FOREIGN EXCHANGE RISK

A material amount of the Company's total sales and earnings are exposed
to changes in foreign exchange rates. The Company seeks to manage this risk in
part through operational means, including managing local currency revenues in
relation to local currency costs and local currency assets in relation to local
currency liabilities. The Company does not engage in any type of forward foreign
currency speculation to hedge its investment in foreign subsidiaries and
affiliates.

Forward foreign currency contracts are utilized by our European
operations to cover specific inventory purchases that are denominated in a
foreign currency.

INTEREST RATE RISK

The Company's U.S. dollar interest-bearing investments and loans are
subject to interest rate risk. The Company invests and borrows primarily on a
short-term or variable-rate basis and does not employ any techniques to hedge
this risk.

The Company's foreign subsidiaries and affiliates invest and borrow in
their functional currency on both a short-term and long-term basis and are
subject to interest rate risk on these assets and liabilities. The Company does
not employ any techniques to hedge this risk.

RISK RELATING TO ARTHUR ANDERSEN LLP'S LACK OF CONSENT

REPRESENTATIVES OF ARTHUR ANDERSEN LLP ARE NOT AVAILABLE TO CONSENT TO
THE INCLUSION OF THEIR REPORT ON THE FINANCIAL STATEMENTS OF RIVIANA FOODS INC.
IN THIS FORM 10-Q REPORT AND THE READER WILL NOT BE ABLE TO RECOVER AGAINST
ARTHUR ANDERSEN LLP UNDER SECTION 11 OF THE SECURITIES ACT OF 1933, AS AMENDED.

Arthur Andersen LLP were previously the independent accountants for
Riviana Foods Inc. until May 24, 2002. Representatives of Arthur Andersen LLP
are not available to provide the consent required for the inclusion of their
report on the financial statements of Riviana Foods Inc. incorporated in this
Form 10-Q report, and the Company has dispensed with the requirement to file
their consent in reliance upon rule 437a of the Securities Act of 1933, as
amended. Because Arthur Andersen LLP have not consented to the inclusion of
their report in this Form 10-Q report, the reader will not be able to recover
against Arthur Andersen LLP under Section 11 of the Securities Act of 1933, as
amended for any untrue statements of a material fact contained in the financial
statements that are incorporated by reference or any omissions to state a
material fact required to be stated therein.

16

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

Within 90 days prior to the date of this report, the Company carried
out an evaluation under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective in timely alerting them to material information
relating to the Company (including its consolidated subsidiaries) required to be
included in the Company's periodic SEC filings.

(b) Changes in internal controls

Not applicable.

17

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's annual meeting of stockholders was held on October 16,
2002. The matters voted on were as follows:

(a) Proposal for the election of eleven directors for one year terms:

(b) Proposal to approve and ratify the appointment of KPMG LLP as the
Company's independent public accountants for the fiscal year
ending June 29, 2003:

Votes for 12,998,580
Votes against 8,908
Abstain 1,603

(c) Proposal to approve and ratify the First Amendment of the 1997
Stock Option Plan:

Votes for 11,550,333
Votes against 452,412
Abstain 260,685
Non-Votes 745,661

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) 10.20 Amendment to the 1997 Stock Option Plan dated October 16,
2002 included as Exhibit 10.20 to Form 10-Q of the
Registrant filed January 31, 2003, which exhibit is
incorporated herein by reference.

15 Letters from KPMG LLP dated April 24, 2003, regarding
unaudited financial statements.

99.1 Certification of the Chief Executive Officer pursuant to
18 U.S.C., Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

18

99.2 Certification of the Chief Financial Officer pursuant to
18 U.S.C., Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K.

Current Report on Form 8-K dated February 4, 2003, reporting that
the Registrant had issued a press release announcing the
execution of an asset purchase agreement with ACH Food Companies,
Inc., a copy of which was filed as Exhibit 99.1.

Current Report on Form 8-K dated May 1, 2003, reporting that the
Registrant had issued a press release announcing operating
results for the fourth quarter ended March 30, 2003, a copy of
which was filed as Exhibit 99.1.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

RIVIANA FOODS INC.
(Registrant)

May 9, 2003 /S/ Joseph A. Hafner, Jr.
--------------------------------------------
Joseph A. Hafner, Jr.
Chief Executive Officer, President and
Director
(Principal Executive Officer)

May 9, 2003 /S/ E. Wayne Ray, Jr.
--------------------------------------------
E. Wayne Ray, Jr.
Vice President, Chief Financial Officer,
Treasurer and Director
(Principal Financial and Accounting Officer)

19

CERTIFICATION

I, Joseph A. Hafner, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Riviana Foods Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 pays prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (of persons performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 9, 2003
/S/ Joseph A. Hafner, Jr.
-------------------------
Joseph A. Hafner, Jr.
Chief Executive Officer

20

CERTIFICATION

I, E. Wayne Ray, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Riviana Foods Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 pays prior to
the filing date of this quarterly report (the "Evaluation
Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (of persons performing the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 9, 2003 /S/ E. Wayne Ray, Jr.
-------------------------------
E. Wayne Ray, Jr.
Vice President, Chief Financial
Officer and Treasurer

21

EXHIBIT INDEX