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: July 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 JULY 31, 1995
Common Stock 4,736,005 shares
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I-FINANCIAL INFORMATION
Consolidated Balance Sheets-July 31, 1995;
January 31, 1995 and July 31, 1994 3
Consolidated Statements of Income-Three months and six months
Ended July 31, 1995 and 1994 4
Consolidated Statements of Cash Flows-
Six Months Ended July 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
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
7/31/95 01/31/95 07/31/94
ASSETS
Cash ................................... $ 1,519 $ 2,304 $ 502
Accounts receivable (less allowance
for doubtful accounts of $383,
$350 and $410) ....................... 12,521 17,592 16,074
Inventories:
Materials ............................ 13,145 13,147 14,436
In process ........................... 5,882 4,709 5,664
Finished goods ....................... 7,348 4,247 6,693
Progress payments .................... 0 0 (4)
Total inventories ................ 26,375 22,103 26,789
Prepaid expenses and other
current assets ...................... 346 382 208
Deferred income taxes .................. 1,414 1,414 1,702
Total current assets ............. 42,175 43,795 45,275
Property, plant and equipment .......... 44,555 43,108 38,695
Less: accumulated depreciation ....... 25,996 24,538 23,921
Net property, plant & equipment .. 18,559 18,570 14,774
Other assets ........................... 3,400 3,271 2,343
TOTAL ASSETS ........................... $64,134 $65,636 $ 62,392
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable, bank .................... $ 0 $ 0 $ 4,000
Current portion of long-term debt ...... 846 907 666
Accounts payable ....................... 4,299 5,435 4,875
Accrued liabilities and
customer advances .................... 7,471 8,736 8,332
Total current liabilities ........ 12,616 15,078 17,873
Long-term debt (less current portion) .. 3,484 4,179 1,778
Deferred income taxes .................. 853 853 870
Stockholders' equity
Common stock, $1 par value,
authorized shares: 100,000,000;
issued: 5,051,908; 5,050,433
and 5,041,106 shares ................ 5,052 5,050 5,041
Paid in capital ...................... 416 420 363
Retained earnings .................... 44,047 42,390 38,801
Less treasury stock, at cost: 49,515 47,860 44,205
315,903 shares .................. 2,334 2,334 2,334
Total stockholders' equity ....... 47,181 45,526 41,871
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $64,134 $65,636 $ 62,392
The accompanying notes are an integral part of the financial statements.
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per-share data)
FOR THE THREE MONTHS ENDED: FOR THE SIX MONTHS ENDED:
7/31/95 7/31/94 7/31/95 7/31/94
<S> <C> <C> <C> <C>
Net sales ................... $ 27,253 $ 26,919 $ 55,040 $ 54,735
Cost of goods sold .......... 22,458 21,875 44,469 44,331
Gross profit .............. 4,795 5,044 10,571 10,404
Operating expenses
Selling ................... 1,615 1,587 3,436 3,352
Administrative ............ 1,505 1,520 3,056 3,069
Beta Raven charge ......... 0 1,800 0 1,800
3,120 4,907 6,492 8,221
Operating income ............ 1,675 137 4,079 2,183
Other income (expense)
Interest .................. (104) (83) (211) (126)
Miscellaneous ............. 161 128 244 259
Income before income taxes .. 1,732 182 4,112 2,316
Income taxes ................ 615 52 1,460 810
Net income .................. $ 1,117 $ 130 $ 2,652 $ 1,506
Average number of common and
common-equivalent shares
outstanding ............... 4,791,862 4,792,303 4,791,791 4,796,928
Net income per common and
common-equivalent share ... $ 0.23 $ 0.03 $ 0.55 $ 0.31
Cash dividends paid per share $ 0.105 $ 0.090 $ 0.210 $ 0.180
</TABLE>
The accompanying notes are an integral part of the financial statements.
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
FOR THE SIX MONTHS ENDED:
7/31/95 7/31/94
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................... $ 2,652 $ 1,506
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization .................... 2,179 1,834
Provision for losses on accounts receivable ...... 51 60
Deferred income taxes ............................ 0 (300)
Equity in earnings of affiliate, net of dividends. (103) (115)
(Increase) decrease in accounts receivable ....... 5,020 406
(Increase) decrease in inventories ............... (4,272) (4,565)
(Increase) decrease in other current assets ...... 36 217
Increase (decrease) in operating liabilities ..... (2,401) (2,402)
Other ............................................ (34) 34
Net cash provided by (used in) operating activities .. 3,128 (3,325)
Cash flows from investing activities:
Capital expenditures ................................. (2,272) (3,289)
Intangible asset expenditures and other .............. 112 (21)
Net cash used in investing activities ................ (2,160) (3,310)
Cash flows from financing activities:
Issuance of short-term debt .......................... 3,500 4,000
Payment of short-term debt ........................... (3,500) 0
Issuance of long-term note ........................... 0 62
Long-term debt principal payments .................... (756) (636)
Proceeds from exercise of stock options .............. 7 115
Dividends paid ....................................... (995) (850)
Other ................................................ (9) 0
Net cash provided by (used in)
financing activities ............................... (1,753) 2,691
Net increase (decrease) in cash and equivalents ...... (785) (3,944)
Cash and cash equivalents at beginning of period ....... 2,304 4,446
Cash and cash equivalents at end of period ............. $ 1,519 $ 502
Cash paid during the period for:
Interest ........................................... $ 214 $ 132
Income taxes ....................................... $ 2,105 $ 1,093
</TABLE>
The accompanying notes are an integral part of the financial statements.
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. 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 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 six month periods ended July 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.
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS PER COMMON SHARE
(Dollars in thousands except per-share data)
FOR THE THREE MONTHS ENDED: FOR THE SIX MONTHS ENDED:
7/31/95 7/31/94 7/31/95 7/31/94
<S> <C> <C> <C> <C>
Net income ................... $ 1,117 $ 130 $ 2,652 $ 1,506
Earnings per common share
- Primary ................ $ 0.23 $ 0.03 $ 0.55 $ 0.31
Earnings per common share
- Fully diluted (1) ...... $ 0.23 $ 0.03 $ 0.55 $ 0.31
Average number of common and
common equivalent shares:
Primary:
Weighted average common
shares outstanding ...... 4,735,082 4,726,553 4,734,826 4,720,670
Dilutive effect of exercise
of certain stock options 56,780 65,750 56,965 76,258
Average common shares
- Primary ............... 4,791,862 4,792,303 4,791,791 4,796,928
Fully diluted (1):
Weighted average common
shares outstanding ...... 4,735,082 4,726,553 4,734,826 4,720,670
Dilutive effect of exercise
of certain stock options 56,780 65,750 56,965 76,258
Average common shares
- Fully diluted ......... 4,791,862 4,792,303 4,791,791 4,796,928
</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 $3.1 million over the first
six months of the current fiscal year. During the comparable period of the prior
fiscal year $3.3 million of cash was used. Aside from the improved net income,
stronger cash flow was primarily caused by lower accounts receivable levels.
Collection of past due accounts at the company's Beta Raven subsidiary and lower
current year sales to Sewn Products segment customers with extended payment
terms accounted for the lower accounts receivable levels. Inventories increased
$4.3 million during the first-half of the current fiscal year due to the
seasonal build up of Sewn Products segment inventories for shipment in the third
and fourth quarters. The company had $1.5 million of cash and no short-term
borrowings as of July 31, 1995. On July 31, 1994 the company had $4.0 million of
seasonal borrowings.
RESULTS OF OPERATIONS
Second quarter sales of $27.3 million and six month sales of $55.0 million were
up slightly from the comparable periods last year. Sales of commercial products
were up $6.1 million during the first half of the current year when compared to
the first half of the prior year. This increase was offset by lower defense
shipments. Net income comparisons for the quarter and six month periods were
impacted by a $1.8 million pre-tax charge taken at the company's Beta Raven
subsidiary in the prior fiscal year. Net income increased from $130,000 or $.03
per share, for the quarter ended July 31, 1994 to $1.1 million or $.23 per share
for the quarter ended July 31, 1995. For the six month period, earnings of $2.7
million, or $.55 per share, were up 76 percent compared to the comparable period
last year.
Electronics segment sales of $6.7 million in the second quarter were 10 percent
higher than the second quarter last year. Flow control sales accounted for the
increase. Second quarter operating income of $559,000 was up 37 percent in the
Electronics segment compared to the prior year second quarter after adjustment
for the Beta Raven charge. The improvement was a result of relatively higher
sales of agricultural flow control products which carry stronger gross profit
rates. Six month sales in the Electronics segment were $16.7 million; an
increase of 9 percent over the first six months of the prior year. Operating
income over the same period in this segment was $2.4 million; a 53 percent
increase over the six months ended July 31, 1994 after adjustment for the Beta
Raven charge.
Plastics segment sales of $12.3 million in the second quarter were 8 percent
higher than the second quarter of the prior year. Increased sales of industrial
tanks, flexible films and pickup-truck toppers all contributed to the
improvement. The profit impact of higher sales was offset by start up and
training costs in the company's Arizona pickup-truck topper plant. These losses
and the unfavorable impact of higher raw material costs caused second quarter
operating income of $395,000 in the Plastics segment to be 51 percent lower than
the second quarter of the prior year. Improved operating results are expected in
upcoming quarters as raw material cost increases level off or begin to reverse
and the Arizona pickup-topper plant becomes fully operational with a trained
work force. Six month sales of $25.5 million in this segment were 14 percent
over the first six months of the prior year. Operating income of $1.2 million
was down 25 percent over the same period.
Sewn Products segment sales were depressed by the exceptionally mild winter in
much of the United States and the resulting inventory carryover by our major
customers. Sales of $8.3 million were down 12 percent from the second quarter of
the prior year. Shipments from this segment are expected to be depressed
throughout the year. Quarterly operating income of $721,000 was essentially
unchanged from the second quarter last year as the impact of lower sales was
offset by improved production efficiencies and expense reductions. Six month
sales of $12.8 million were down 25 percent from the first six months of the
prior year. Defense sales from this segment were down $3.3 million. Operating
income for the six month period was $549,000; down 37 percent from the
comparable period of the prior year.
Consolidated gross profits in the second quarter were down 5 percent from the
year ago period due primarily to the unfavorable performance in the Plastics
segment. Selling expenses were 5.9 percent of revenues in both the quarters
ended July 31, 1995 and 1994. Administrative expenses were down slightly from
the prior year due primarily to cost reductions at Beta Raven. Interest expense
reflects higher long term debt, compared to the prior year and higher interest
rates. 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:
The Company's annual meeting of stockholders was held on May 23, 1995. The
following members were elected to the Company's Board of Directors to hold
office for the ensuing year.
Nominee In Favor Withheld
Tony W. Bour 3,511,361 3,966
David A. Christensen 3,514,717 610
Mark E. Griffin 3,514,505 822
Conrad J. Hoigaard 3,514,317 1,010
Kevin T. Kirby 3,513,808 1,519
Edward J. Leahy 3,511,510 3,817
John C. Skoglund 3,514,632 695
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: SEPTEMBER 7, 1995
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JUL-31-1995
<CASH> 1,519
<SECURITIES> 0
<RECEIVABLES> 12,904
<ALLOWANCES> 383
<INVENTORY> 26,375
<CURRENT-ASSETS> 42,175
<PP&E> 44,555
<DEPRECIATION> 25,996
<TOTAL-ASSETS> 64,134
<CURRENT-LIABILITIES> 12,616
<BONDS> 3,484
<COMMON> 5,052
0
0
<OTHER-SE> 42,129
<TOTAL-LIABILITY-AND-EQUITY> 64,134
<SALES> 55,040
<TOTAL-REVENUES> 55,040
<CGS> 44,469
<TOTAL-COSTS> 44,469
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 211
<INCOME-PRETAX> 4,112
<INCOME-TAX> 1,460
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,652
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
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