[LETTERHEAD OF DELOITTE & TOUCHE]
February 13, 2003
Mr. Calixto Chaves
Chief Executive Officer
Rica Food Inc.
Heredia, Costa Rica
Dear Mr. Chaves:
Attached please find our response to the Form 8-K of Rica Foods, Inc. dated
January 23, 2003.
We understand that you will be filing our response to the Securities and
Exchange Commission.
Truly yours,
/s/ Oscar Castro M.
Oscar Castro M.
Partner
Cc. Mr. Federico Vargas, Chairman of the Audit Committee
Mr. David E. Wells, Hunton & Williams
[LETTERHEAD OF DELOITTE & TOUCHE]
February 13, 2003
Securities and Exchange Commission
Mail Stop 11-3
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs/Madams:
We have read the comments in Item 4 of Form 8-K of Rica Foods, Inc. (the
"Company") dated January 23, 2003, and have the following comments:
First Paragraph:
We agree with the comment made in this paragraph, except for the date referenced
therein should be January 23, 2003.
Second Paragraph:
We agree with the comment made in this paragraph.
Third Paragraph:
We have no basis to agree or disagree with the comment as to the Company's
belief. However, as noted in the second paragraph, the client-auditor
relationship between the Company and us has ceased.
Fourth Paragraph:
We agree with the comment made in this paragraph.
Fifth Paragraph:
The reference to January 13, 2002 in this paragraph should be to January 13,
2003. Otherwise we do not have a basis to agree or disagree with the comment
made in this paragraph. For purpose of clarity, on December 16, 2002, the
Company had provided us a draft of its Form 10-K for the year ended September
30, 2002, which document we were in the process of reviewing prior to the
termination of our client-auditor relationship.
Securities and Exchange Commission
Page 2
Sixth Paragraph:
We have no basis to agree or disagree with the approximate time of day on
January 13, 2003 that the Company filed its Form 10-K. Otherwise, we agree with
the comments made in this paragraph that the financial statements included in
the Form 10-K contained a number of errors, which for purposes of clarity, we
believed are material errors.
Seventh Paragraph:
We have no basis to agree or disagree with the comments made in this paragraph.
However, we confirm that we had communicated to the Company's Chief Financial
Officer ("CFO") prior to the Company's filing of its Form 10-K on January 13,
2003 that the Company's financial statements included therein contained material
errors. Such errors did include the inappropriate classifications as described.
We also note that we disagree with the characterization as "Non-Preferred
Classifications". We had informed the CFO that the classifications were in
error.
Eighth Paragraph:
We have no basis to agree or disagree with the comments made in this paragraph.
However, we do not believe there were specific changes to the "audit report"
that had been requested, rather we had indicated that all changes to the
financial statements were required to be made prior to the Company filing its
Form 10-K.
Ninth Paragraph:
We agree with the comment made in the first sentence of this paragraph and
confirm that such independent auditors report purportedly signed by Deloitte &
Touche S.A. was not issued as discussed in the thirteenth paragraph.
We have no basis to agree or disagree with the comments made in the second and
third sentences of this paragraph. However, for purposes of clarity, we did
indicate to the CFO that once the Company had completed and was prepared to
issue a corrected set of financial statements, that we believed we would be in a
position to issue an audit report on the correct financial statements.
Tenth Paragraph:
We agree with the comment made in the first sentence of this paragraph. We have
no basis to agree or disagree with the comments made in the second and third
sentences of this paragraph. For purposes of clarity, we received a letter dated
January 17, 2003 from the Company, a copy of which is appended hereto.
Securities and Exchange Commission
Page 3
Eleventh Paragraph:
We agree with the comment made in the first sentence of this paragraph.
With respect to the second sentence of this paragraph, for purposes of clarity,
we issued and delivered a letter to Mr. Vargas on January 16, 2003, which letter
is referenced in paragraphs thirteen through sixteen.
We disagree with the comment made in the third sentence of this paragraph. We
note that the purpose of our communications on January 16, 2003 was to request
the Company to take appropriate action by filing a Form 8-K with the SEC. Any
future considerations or actions by us would be a result of the Company's
response to our January 16, 2003 request.
For purposes of additional clarity, we had also met with Mr. Vargas the morning
of January 16, 2003 to discuss our review process for an amended Form 10-K, if
filed, and our concerns resulting from the Company's Form 10-K filing on January
13, 2003.
Twelfth through Sixteenth Paragraphs:
We agree with the comments made in these paragraphs.
Seventeenth Paragraph:
We have no basis to agree or disagree with the comment made in this paragraph.
Eighteenth Paragraph:
We have no basis to agree or disagree with the comment made in this paragraph as
it relates to the Board, Audit Committee and Executive Officers. We agree with
the comment made in this paragraph that we do not prepare the Company's
financial statements and did not issue or provide any consent to the inclusion
of an audit report by us in the Form 10-K filed by the Company. We had informed
management of the Company that we would be prepared to consent to including our
audit report on financial statements adjusted to include the corrections
proposed by us prior to the filing. We did not provide any consent on the
erroneous financial statements included in the Company's Form 10-K filed on
January 13, 2003.
Nineteenth Paragraph:
We have no basis to agree or disagree with the comment made in the first
sentence of this paragraph. We agree with the comment made in the second
sentence of this paragraph.
Securities and Exchange Commission
Page 4
We have no basis to agree or disagree with the comment made in the third
sentence of this paragraph as it relates to the belief of the Board and Audit
Committee. See the thirteenth through sixteenth paragraph for purposes of
clarity regarding the audit report purportedly signed and issued by us on the
financial statements included in the Company's Form 10-K that was filed on
January 13, 2003. Additionally, for purposes of clarity and completeness, we
communicated to the CFO, prior to the filing of the Company's Form 10-K, that
the Company needed to correct the financial statements to be filed. We believed
we would be in a position to issue an audit report on the corrected financial
statements.
Twentieth Paragraph:
We have no basis to agree or disagree with the comment made in the first
sentence of this paragraph as it relates to the Board and Audit Committee.
However, we do agree that the Company had filed a Form 10-K (which Form 10-K
contained financial statements that contained material errors), that the
Company had not received a signed audit report from us and needed to inform all
recipients of those matters discussed in the fourteenth paragraph.
We have no basis to agree or disagree with the comment made in the second
sentence of this paragraph as it relates to the concerns of the Board and Audit
Committee.
As for the comment made in the third sentence of this paragraph, we had informed
the Company that our evaluation and review of accounting matters were in
process. Otherwise, we have no basis to agree or disagree with the comment in
the third sentence of this paragraph.
Twenty-First Paragraph:
We agree with the comment made in the first sentence of this paragraph regarding
a letter sent to Deloitte & Touche S.A. For purposes of clarity and
completeness, a copy of the letter received by us is appended hereto. Otherwise,
we have no basis to agree or disagree with the comment in the first and second
sentence of this paragraph.
Twenty-Second Paragraph:
We agree with the comment made in this paragraph.
Twenty-Third Paragraph:
We have no basis to agree or disagree with the comment made in this paragraph as
it relates to the Company's suspicions. We disagree with the comment that Mr.
Castro repeatedly refused to discuss the Company's proposal as he had discussed
these matters with the Company and confirmed our written request of January 16,
2003 that the Company file a Form 8-K addressing those matters discussed in the
fourteenth paragraph.
Securities and Exchange Commission
Page 5
Twenty Fourth Paragraph:
We have no basis to agree or disagree with the comments made in the first and
second sentences of this paragraph. However, we believe that the errors
contained in the financial statements filed in the Company's Form 10-K would
have had the effect of requiring us to make reference to such non-compliance
with accounting principles generally accepted in the United States of America in
our audit report.
We agree with the comment made in the third sentence of this paragraph regarding
the discussions with Mr. Castro. We have no basis to agree or disagree with the
remainder of the sentence.
Twenty-Fifth through Thirty-Second Paragraphs:
We agree with the comments made in these paragraphs as to the facts that we
provided the Company with the draft detailed in paragraphs 26 through 28 and we
got the draft from the Company described in paragraphs 30 through 32.
Thirty-Third Paragraph:
We have no basis to agree or disagree with the comments of this paragraph. We
note that we had informed the Company prior to its filing of the Form 10-K on
January 13, 2003 that its financial statements included in its Form 10-K
contained material errors and that the Company should correct those financial
statements to be included in the Form 10-K. Further, we note that we informed
the Company that it should file a Form 8-K to state those matters discussed in
the fourteenth paragraph.
Thirty-Fourth Paragraph:
We have no basic to agree or disagree with the comment made in this paragraph as
it relates to the Company's reiteration of its concerns. Otherwise, we agree
with the comment made in this paragraph.
Thirty-Fifth through Fortieth Paragraphs:
We agree with the comments made in these paragraphs.
Securities and Exchange Commission
Page 6
Forty-First Paragraph:
We have no basis to agree or disagree with the comments made in this paragraph
as it relates to the Company's beliefs. We note that we had contained working
with the Company in the review of its draft Form 10-K/A and had informed the
Company on January 20, 2003 that we had not completed that review. We also
reiterated our request that a Form 8-K should be filed to address our concerns
previously communicated in our letter dated January 16, 2003.
Forty-Second through Forty-Fifth Paragraphs:
We agree that the Company filed a Form 8-K as set forth in these paragraphs.
Forty-Sixth Paragraph:
With respect to the first sentence, the phone call was initiated at the request
of the outside counsel of the Company. With respect to the second sentence, we
disagree with the phrase "Deloitte & Touche's inability to trust management of
the Company and", as this statement was never made. To provide clarity and
completeness, in the phone conversation we also discussed that our consideration
of the client-auditor relationship began as a result of the Company's filing of
its Form 10-K on January 13, 2003, which included financial statements
containing material errors and an audit report purportedly signed and issued by
us. Our consideration of the relationship was further impacted by the Company's
Form 8-K filing on January 21, 2003, with wording related to Deloitte & Touche
S.A. that differed from our requests.
Forty-Seventh through Fiftieth Paragraphs:
We agree with the comments made in these paragraphs.
Fifty-First Paragraph:
We have no basis to agree or disagree with the comments in this paragraph as it
relates to the Company's beliefs. For purposes of clarity, we note that the date
in the first sentence of this paragraph should be January 22, 2003.
Additionally, we reiterate that we had specifically told the CFO that the
financial statements that were included in the filed Form 10-K contained
material errors and that the Company should correct all errors included therein
before filing its Form 10-K on January 13, 2003. Further, we reiterate that
Deloitte & Touche S.A. had not and have not issued any audit report on any
financial statements of the Company for any period.
Securities and Exchange Commission
Page 7
Fifty-Second Paragraph:
We have no basis to agree or disagree with the comment in the paragraph as it
relates to the beliefs of the Board and Audit Committee. However, we had
communicated to the CFO, prior to the Company's filing of its Form 10-K, that
the financial statements included therein contained material errors.
Fifth-Third Paragraph:
We have no basis to agree or disagree with the comment of this paragraph.
However, we believe the errors contained in the financial statements filed in
the Form 10-K would have had the effect of requiring us to make a reference to
such non-compliance with accounting principles generally accepted in the United
States of America in our audit report.
Fifty-Fourth and Fifty-Fifth Paragraphs:
We have no basis to agree or disagree with the comments made in these
paragraphs.
Please see the attachment to this document.
Yours truly,
/s/ Oscar Castro M.
Oscar Castro M.
Partner
[LOGO]
RICA FOODS, INC.
Amex-RCF
January 17, 2003
VIA FACSIMILE AND REGULAR MAIL
Oscar Castro
Deloitte & Touche y Co.
Apartado Postal 10296-1000
San Jose, Costa Rica
Re: Rica Foods, Inc. (the "Company") - Deloitte & Touche Auditor Report
Dear Oscar:
We are in receipt of Deloitte & Touche's ("DT") letter dated January 16, 2003 to
the Members of the Audit Committee and Board of Directors of the Company.
We believe our understanding of the circumstances surrounding the filing may be
different than yours; nonetheless, we believe the Company and DT should work
together to make the "best" financial information available to the investing
public as soon as possible.
Subject to the Company's receipt of a signed audit report from DT, the Company
is currently hoping to file an amended Form 10-K (the "Amendment") on Monday or
Tuesday of next week. Assuming the Amendment is filed at such time, the Company
currently believes it may be more appropriate to identify "errors" with respect
to the Form 10-K in the Amendment, rather than attempting to describe any
potential "errors" in a Form 8-K. The Company believes that, relative to a Form
8-K, the Amendment will be able to provide an investor far more comprehensive,
detailed and balanced information regarding any "errors" in the Form 10-K.
Please let us know if you believe there is a more advisable course of action.
Regards,
/s/ Calixto Chaves
Calixto Chaves
Chairman of
Rica Foods, Inc.