FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: October 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________________
Commission file number: 0-3136
RAVEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 46-0246171
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
205 EAST 6TH STREET
P.O. BOX 5107
SIOUX FALLS, SD 57117-5107
(Address of principal executive offices) (Zip code)
605-336-2750
Registrant's telephone number, including area code
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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF OCTOBER 31, 1995
Common Stock 4,744,358 shares
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I-FINANCIAL INFORMATION
Consolidated Balance Sheets-October 31, 1995;
January 31, 1995 and October 31, 1994 3
Consolidated Statements of Income-Three months and
nine months ended October 31, 1995 and 1994 4
Consolidated Statements of Cash Flows-
Nine months ended October 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Computation of Earnings Per Share 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II-OTHER INFORMATION 10
PART I - FINANCIAL INFORMATION
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<CAPTION>
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
10/31/95 01/31/95 10/31/94
<S> <C> <C> <C>
ASSETS
Cash ................................................................... $ 2,041 $ 2,304 $ 1,756
Accounts receivable, less allowance for
doubtful accounts of $375, $350 and $338 ............................. 19,820 17,592 19,669
Inventories:
Materials ............................................................ 12,917 13,147 13,888
In process ........................................................... 6,249 4,709 5,303
Finished goods ....................................................... 4,665 4,247 3,503
Progress payments .................................................... (495) 0 0
Total inventories ................................................ 23,336 22,103 22,694
Prepaid expenses and other current assets .............................. 413 382 310
Deferred income taxes .................................................. 1,414 1,414 1,702
Total current assets ............................................. 47,024 43,795 46,131
Property, plant and equipment .......................................... 44,804 43,108 40,906
Less: accumulated depreciation ....................................... 26,613 24,538 24,726
Net property, plant & equipment .................................. 18,191 18,570 16,180
Other assets ........................................................... 3,423 3,271 2,416
Total assets ........................................................... $ 68,638 $65,636 $64,727
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable, bank .................................................... $ 0 $ 0 $ 3,000
Current portion of long-term debt ...................................... 446 907 660
Accounts payable ....................................................... 6,166 5,435 4,778
Accrued liabilities and customer advances .............................. 9,184 8,736 9,778
Total current liabilities ........................................ 15,796 15,078 18,216
Long-term debt, less current portion ................................... 3,417 4,179 1,738
Deferred income taxes .................................................. 853 853 870
Stockholders' equity
Common stock, $1 par value, authorized shares: 100,000,000;
issued:5,060,261; 5,050,433 and 5,046,299 shares .................... 5,060 5,050 5,046
Paid in capital ...................................................... 396 420 367
Retained earnings .................................................... 45,450 42,390 40,824
50,906 47,860 46,237
Less treasury stock, at cost:
315,903 shares .................................................. 2,334 2,334 2,334
Total stockholders' equity ....................................... 48,572 45,526 43,903
Total liabilities & stockholders' equity ............................... $ 68,638 $65,636 $64,727
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The accompanying notes are an integral part of the financial statements
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per-share data)
FOR THE THREE FOR THE NINE
MONTHS ENDED: MONTHS ENDED:
10/31/95 10/31/94 10/31/95 10/31/94
<S> <C> <C> <C> <C>
Net sales ................... $ 35,560 $ 35,890 $ 90,600 $ 90,625
Cost of goods sold .......... 29,160 28,690 73,629 73,021
Gross profit .............. 6,400 7,200 16,971 17,604
Operating expenses
Selling ................... 1,818 1,838 5,254 5,190
Administrative ............ 1,467 1,482 4,523 4,551
Beta Raven charge ......... 1,800
3,285 3,320 9,777 11,541
Operating income ............ 3,115 3,880 7,194 6,063
Other income (expense)
Interest .................. (86) (117) (297) (243)
Miscellaneous ............. 28 114 272 373
Income before income taxes .. 3,057 3,877 7,169 6,193
Income taxes ................ 1,085 1,358 2,545 2,168
Net income .................. $ 1,972 $ 2,519 $ 4,624 $ 4,025
Average number of common and
common-equivalent shares
outstanding ............... 4,785,738 4,784,643 4,790,345 4,792,833
Net income per common and
common-equivalent share ... $ 0.41 $ 0.53 $ 0.97 $ 0.84
Cash dividends paid per share $ 0.120 $ 0.105 $ 0.330 $ 0.285
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The accompanying notes are an integral part of the financial statements.
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
FOR THE NINE
MONTHS ENDED:
10/31/95 10/31/94
Cash flows from operating activities:
Net income .......................................... $ 4,624 $ 4,025
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ................... 3,355 2,746
Provision for losses on accounts receivable ..... 104 131
Deferred income taxes ........................... 0 (300)
Equity in earnings of affiliate, net of dividends (153) (190)
(Increase) decrease in accounts receivable ...... (2,332) (3,260)
(Increase) decrease in inventories .............. (1,233) (470)
(Increase) decrease in other current assets ..... (31) 115
Increase (decrease) in operating liabilities .... 1,179 (1,053)
Other ........................................... (18) 48
Net cash provided by (used in) operating activities . 5,495 1,792
Cash flows from investing activities:
Capital expenditures ................................ (3,078) (5,611)
Intangible asset expenditures and other ............. 121 (29)
Net cash used in investing activities ............... (2,957) (5,640)
Cash flows from financing activities:
Issuance of short-term debt ......................... 4,500 5,000
Payment of short-term debt .......................... (4,500) (2,000)
Issuance of long-term note .......................... 0 62
Long-term debt principal payments ................... (1,223) (682)
Proceeds from exercise of stock options ............. 49 124
Dividends paid ...................................... (1,564) (1,346)
Other ............................................... (63) 0
Net cash provided by (used in)
financing activities .............................. (2,801) 1,158
Net increase (decrease) in cash and equivalents ..... (263) (2,690)
Cash and cash equivalents at beginning of period ...... 2,304 4,446
Cash and cash equivalents at end of period ............ $2,041 $ 1,756
Cash paid during the period for:
Interest .......................................... $ 317 $ 254
Income taxes ...................................... $ 2,725 $ 1,335
The accompanying notes are an integral part of the financial statements.
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
of Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month and nine month periods
ended October 31, 1995 are not necessarily indicative of the results that may be
expected for the year ending January 31, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended January 31, 1995.
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<CAPTION>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS PER COMMON SHARE
(Dollars in thousands except per-share data)
FOR THE THREE FOR THE NINE
MONTHS ENDED: MONTHS ENDED:
10/31/95 10/31/94 10/31/95 10/31/94
<S> <C> <C> <C> <C>
Net income ........................ $ 1,972 $ 2,519 $ 4,624 $ 4,025
Earnings per common share
- Primary ..................... $ 0.41 $ 0.53 $ 0.97 $ 0.84
Earnings per common share
- Fully diluted (1) ........... $ 0.41 $ 0.53 $ 0.97 $ 0.84
Average number of common and common
equivalent shares:
Primary:
Weighted average common
shares outstanding ........... 4,741,231 4,729,134 4,737,627 4,723,491
Dilutive effect of exercise
of certain stock options ..... 44,507 55,509 52,718 69,342
Average common shares
- Primary .................... 4,785,738 4,784,643 4,790,345 4,792,833
Fully diluted (1):
Weighted average common
shares outstanding ........... 4,741,231 4,729,134 4,737,627 4,723,491
Dilutive effect of exercise
of certain stock options ..... 44,507 58,898 52,718 69,342
Average common shares
- Fully diluted .............. 4,785,738 4,788,032 4,790,345 4,792,833
</TABLE>
(1) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because it results in dilution of less than 3%.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Net cash provided by operating activities totaled $5.5 million for the nine
months ended October 31, 1995, an increase of $3.7 million over the nine months
ended October 31, 1994. Higher earnings, increased depreciation, and
amortization, and the timing of disbursements accounted for much of the
increase. Expenditures for fixed assets declined from $5.6 million for the first
nine months last year to $3.1 million during the current year, further improving
the company's cash position. The company had $2.0 million of cash and no notes
payable at October 31, 1995, compared to $1.8 million of cash and $3.0 million
of notes payable at October 31, 1994.
RESULTS OF OPERATIONS
Third quarter sales of $35.6 million were slightly less than the $35.9 million
of third quarter sales in the prior year. Net income of $2.0 million ($.41 per
share) in the third quarter was 22 percent less than the $2.5 million ($.53 per
share) reported one year ago. The decline in net income from the prior year
third quarter was primarily a result of the company's conversion from defense to
commercial revenues, slower sales of sewn products and start up costs at the
company's pickup truck topper plant in Arizona. Net sales for the nine months
ended October 31, 1995 were $90.6 million, approximately the same level as the
first nine months of the prior fiscal year. Net income of $4.6 million ($.97 per
share) was 15 percent higher than the first nine months of the prior fiscal
year. The second quarter of the prior period included a $1.8 million pre-tax
charge at the company's Beta Raven subsidiary.
Electronics segment sales of $6.9 million in the third quarter were 18 percent
lower than the prior year. Increased sales of agricultural electronics were
offset by sharply lower defense shipments. Foreign and domestic military
shipments totaling $3.5 million shipped during the third quarter of the prior
year. These shipments carried strong margins and had no counterpart in the
quarter ended October 31, 1995. Third quarter operating income of $511,000 was
down 64 percent from the third quarter of the prior fiscal year. Nine month
sales of $23.6 million were essentially unchanged from the first nine months of
the prior year. Operating income over the same period was $2.9 million; down 3
percent from the nine months ended October 31, 1994 after adjustment for the
Beta Raven charge.
Plastics segment sales of $15.4 million in the third quarter were up 20 percent
from the third quarter of the prior year. Increased sales of flexible films, due
partially to demand for plastic film in response to the severe hurricane season,
and higher sales of plastic tanks accounted for the increase. Operating income
of $1.3 million in the third quarter was up 46 percent from the prior year's
third quarter. The profit impact of the higher sales was partially offset by
start-up costs in the company's Arizona pickup-truck topper plant. Nine month
sales of $41.0 million were 16 percent higher than the first nine months of the
prior year. Nine month operating income of $2.5 million was essentially
unchanged from the prior year as the losses in Arizona and the unfavorable
impact of higher raw material costs offset the impact of higher sales during the
first two quarters of the fiscal year.
Sewn Products segment sales continued to be depressed by last year's
exceptionally mild winter in much of the United States and the resulting
inventory carryover by our major customers. Sales of $13.3 million were down 10
percent from the third quarter of the prior year. Operating income for the
quarter was $1.3 million; down 16 percent from the comparable quarter last year.
Nine month sales of $26.0 million and operating income of $1.9 million were down
18 and 24 percent, respectively from the first nine months of the prior year.
Nine month defense sales in this segment were down $3.3 million over the first
nine months of the prior year.
Consolidated gross profits in the third quarter were down 11 percent and the
gross margin rate dropped from 20 percent in the third quarter of the prior
fiscal year to 18 percent in the current period. This drop was due primarily to
the lower profitability in the Electronics segment. Selling, administrative and
other expenses were essentially unchanged from the prior year. The income tax
rate of 35.5 percent used in the current year was slightly higher than the 35.0
percent used during the prior fiscal year.
PART II-OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: None.
Item 5. Other Information: None
Item 6. (a) Exhibits Filed: Exh. 27-Financial Data schedule (for S.E.C. only).
(See Part 1, page 7 for earnings per share computation)
(b) Reports on Form 8-K: None
SIGNATURES
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.
RAVEN INDUSTRIES, INC.
/s/ Arnold J. Thue
Arnold J. Thue
Vice President, Treasurer
and Principal Financial Officer
DATE: NOVEMBER 29, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-END> OCT-31-1995
<CASH> 2,041
<SECURITIES> 0
<RECEIVABLES> 20,195
<ALLOWANCES> 375
<INVENTORY> 23,336
<CURRENT-ASSETS> 47,024
<PP&E> 44,804
<DEPRECIATION> 26,613
<TOTAL-ASSETS> 68,638
<CURRENT-LIABILITIES> 15,796
<BONDS> 3,417
<COMMON> 5,060
0
0
<OTHER-SE> 43,512
<TOTAL-LIABILITY-AND-EQUITY> 68,638
<SALES> 90,600
<TOTAL-REVENUES> 90,600
<CGS> 73,629
<TOTAL-COSTS> 73,629
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 297
<INCOME-PRETAX> 7,169
<INCOME-TAX> 2,545
<INCOME-CONTINUING> 4,624
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,624
<EPS-PRIMARY> 0.97
<EPS-DILUTED> 0.97
</TABLE>
