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, 1996
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.
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(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 46-0246171
- --------------------------------------------- -------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
205 EAST 6TH STREET
P.O. BOX 5107
SIOUX FALLS, SD 57117-5107
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(Address of principal executive offices) (Zip code)
605-336-2750
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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, 1996
- ---------------------------- ----------------------------------
Common Stock 4,740,706 shares
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I-FINANCIAL INFORMATION
Consolidated Balance Sheets-October 31, 1996;
January 31, 1996 and October 31, 1995 3
Consolidated Statements of Income-Three months and nine months
ended October 31, 1996 and 1995 4
Consolidated Statements of Cash Flows-
Nine months ended October 31, 1996 and 1995 5
Note to Consolidated Financial Statements 6
Computations of Earnings Per Common Share 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II-OTHER INFORMATION 10
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
10/31/96 01/31/96 10/31/95
-------- -------- --------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents ................................... $ 1,960 $ 3,804 $ 2,041
Accounts receivable, less allowance for ....................
doubtful accounts of $337, $340 and $375 .................. 21,243 16,002 19,820
Inventories: ................................................
Materials ................................................. 16,364 13,317 12,917
In process ................................................ 5,094 5,605 6,249
Finished goods ............................................ 4,944 5,236 4,665
Progress payments ......................................... 0 (261) (495)
-------- -------- --------
Total inventories ..................................... 26,402 23,897 23,336
Prepaid expenses and other current assets ................... 365 413 413
Deferred income taxes ....................................... 1,579 1,579 1,414
-------- -------- --------
Total current assets .................................. 51,549 45,695 47,024
-------- -------- --------
Property, plant and equipment ............................... 47,320 45,020 44,804
Less: accumulated depreciation ............................ 29,429 26,951 26,613
-------- -------- --------
Net property, plant & equipment ....................... 17,891 18,069 18,191
Other assets ................................................ 3,619 3,789 3,423
-------- -------- --------
TOTAL ASSETS ................................................ $ 73,059 $ 67,553 $ 68,638
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY ........................
Current portion of long-term debt ........................... $ 813 $ 813 $ 446
Accounts payable ............................................ 5,748 4,651 6,166
Accrued liabilities and customer advances ................... 10,010 9,307 9,184
-------- -------- --------
Total current liabilities ............................. 16,571 14,771 15,796
Long-term debt, less current portion ........................ 2,618 2,816 3,417
Deferred income taxes ....................................... 815 815 853
Stockholders' equity ........................................
Common stock, $1 par value, authorized shares: 100,000,000;
issued: 5,093,109; 5,068,379 and 5,060,261 shares ........ 5,093 5,068 5,060
Paid in capital ........................................... 645 536 396
Retained earnings ......................................... 50,227 46,457 45,450
-------- -------- --------
55,965 52,061 50,906
Less treasury stock, at cost: .............................
352,403; 352,403 and 315,903 shares ................... 2,910 2,910 2,334
-------- -------- --------
Total stockholders' equity ............................ 53,055 49,151 48,572
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................. $ 73,059 $ 67,553 $ 68,638
======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
<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:
--------------------------------------------------------------
10/31/96 10/31/95 10/31/96 10/31/95
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales ................... $ 38,943 $ 35,560 $ 101,088 $ 90,600
Cost of goods sold .......... 31,888 29,160 82,549 73,629
----------- ----------- ----------- -----------
Gross profit .............. 7,055 6,400 18,539 16,971
----------- ----------- ----------- -----------
Operating expenses
Selling ................... 1,903 1,818 5,353 5,254
Administrative ............ 1,554 1,467 4,547 4,523
----------- ----------- ----------- -----------
3,457 3,285 9,900 9,777
----------- ----------- ----------- -----------
Operating income ............ 3,598 3,115 8,639 7,194
----------- ----------- ----------- -----------
Other income (expense)
Interest .................. (83) (86) (224) (297)
Miscellaneous ............. 56 28 144 272
----------- ----------- ----------- -----------
Income before income taxes .. 3,571 3,057 8,559 7,169
Income taxes ................ 1,268 1,085 3,039 2,545
----------- ----------- ----------- -----------
Net income .................. $ 2,303 $ 1,972 $ 5,520 $ 4,624
=========== =========== =========== ===========
Average number of common and
common-equivalent shares
outstanding ............... 4,774,665 4,785,738 4,759,543 4,790,345
=========== =========== =========== ===========
Net income per common and
common-equivalent share ... $ 0.48 $ 0.41 $ 1.16 $ 0.97
=========== =========== =========== ===========
Cash dividends paid per share $ 0.130 $ 0.120 $ 0.370 $ 0.330
=========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
FOR THE NINE
MONTHS ENDED:
---------------------
10/31/96 10/31/95
------- -------
Cash flows from operating activities:
Net income .......................................... $ 5,520 $ 4,624
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ................... 3,529 3,355
Provision for losses on accounts receivable ..... 71 104
Equity in earnings of affiliate, net of dividends (1) (153)
(Increase) decrease in accounts receivable ...... (5,312) (2,332)
(Increase) decrease in inventories .............. (2,505) (1,233)
(Increase) decrease in other current assets ..... 48 (31)
Increase (decrease) in operating liabilities .... 1,800 1,179
Other ........................................... 54 (18)
------- -------
Net cash provided by (used in) operating activities . 3,204 5,495
Cash flows from investing activities:
Capital expenditures ................................ (3,262) (3,078)
Intangible asset expenditures and other ............. 28 121
------- -------
Net cash used in investing activities ............... (3,234) (2,957)
Cash flows from financing activities:
Issuance of short-term debt ......................... 0 4,500
Payment of short-term debt .......................... 0 (4,500)
Long-term debt principal payments ................... (198) (1,223)
Proceeds from exercise of stock options ............. 134 49
Dividends paid ...................................... (1,750) (1,564)
Other ............................................... 0 (63)
------- -------
Net cash provided by (used in)
financing activities .............................. (1,814) (2,801)
------- -------
Net increase (decrease) in cash and equivalents ..... (1,844) (263)
Cash and cash equivalents at beginning of period ...... 3,804 2,304
------- -------
Cash and cash equivalents at end of period ............ $ 1,960 $ 2,041
======= =======
Cash paid during the period for:
Interest .......................................... $ 229 $ 317
Income taxes ...................................... $ 2,737 $ 2,725
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 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 nine month periods
ended October 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending January 31, 1997. For further information, refer to
the consolidated financial statements and notes thereto included in the
Company's annual report on Form 10-K for the year ended January 31, 1996.
<TABLE>
<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:
------------------------- -------------------------
10/31/96 10/31/95 10/31/96 10/31/95
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income ........................................... $ 2,303 $ 1,972 $ 5,520 $ 4,624
Earnings per common share
- Primary ........................................ $ 0.48 $ 0.41 $ 1.16 $ 0.97
========== ========== ========== ==========
Earnings per common share
- Fully diluted (1) .............................. $ 0.48 $ 0.41 $ 1.16 $ 0.97
========== ========== ========== ==========
Average number of common and common equivalent shares:
Primary:
Weighted average common
shares outstanding .............................. 4,738,928 4,741,231 4,727,145 4,737,627
Dilutive effect of exercise
of certain stock options ........................ 35,737 44,507 32,398 52,718
---------- ---------- ---------- ----------
Average common shares
- Primary ....................................... 4,774,665 4,785,738 4,759,543 4,790,345
========== ========== ========== ==========
Fully diluted (1):
Weighted average common
shares outstanding .............................. 4,738,928 4,741,231 4,727,146 4,737,627
Dilutive effect of exercise
of certain stock options ........................ 38,022 44,507 33,159 52,718
---------- ---------- ---------- ----------
Average common shares
- Fully diluted ................................. 4,776,950 4,785,738 4,760,305 4,790,345
========== ========== ========== ==========
(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%.
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The company had $2.0 million of cash at October 31, 1996. This balance was
essentially unchanged from one year earlier and was $1.8 million less than the
beginning of the current fiscal year. Accounts receivable and inventory balances
were higher at October 31, 1996 than October 31, 1995 as a result of higher
sales and production volumes. Management does not expect that the company will
need to borrow against its short-term credit line during this fiscal year.
Borrowings and repayments during the fiscal year ended January 31, 1996 totaled
$4.5 million.
RESULTS OF OPERATIONS
Third quarter sales of $38.9 million were 10 percent higher than the comparable
period of the prior year. Net income of $2.3 million ($.48 per share) was 17
percent higher than the $2.0 million reported in the third quarter of the prior
year. Most of the improvement in the quarter was from the company's Electronics
segment. For the nine month period, sales of $101.1 million and net income of
$5.5 million were up 12 and 19 percent, respectively, when compared to the first
nine months of the prior fiscal year. Most of the nine month sales increase was
in the Electronics segment, and all of the segments reported operating income
growth in excess of 15 percent.
Electronics segment sales were $10.7 million in the third quarter; a 56 percent
increase over the comparable period of the prior year. The continuing transition
of the company's contract electronics business from defense to commercial
contracts accounted for much of the increase. Additionally, higher demand for
flow control precision farming products increased sales. Third quarter operating
income of $1.1 million in the Electronics segment was more than double the
$511,000 reported one year earlier. The higher sales combined with stronger
gross profit rates and relatively flat expenses produced the improved operating
performance. Nine month sales of $31.8 million were 35 percent higher than the
comparable period last year in the Electronics segment. Operating income of $3.3
million increased more than 15 percent over the same period. Start-up costs
related to new commercial ventures reduced gross margin percentages in this
segment during the first six months of the current fiscal year.
Plastics segment sales of $15.2 million in the third quarter were 2 percent
lower than the third quarter of the prior year. Last year, third quarter sales
included $1.6 million of flexible films deliveries in response to the severe
hurricane season. Sales of pickup-truck toppers and plastic tanks increased over
the prior year. Operating income of $925,000 in the third quarter was 28 percent
less than the comparable period of the prior year. Lost margin in flexible films
sales accounted for most of the decline. Nine month sales of $43.3 million were
6 percent higher than the first nine months of the prior year in the Plastics
segment. Nine month operating income of $3.0 million was 21 percent higher than
the comparable period of the prior year. More favorable trends in material
prices have boosted year-to-date gross profit rates in this segment.
Sewn products segment sales were $13.1 million in the third quarter and $25.9
million for the nine month period, both within 2 percent of the comparable
figures from the prior year. Softening demand for the company's branded products
was partially offset by increased deliveries of product to catalog merchandisers
and sales of inflatable display products. Operating income of $1.6 million for
the three months and $2.4 million for the nine months was 19 and 26 percent
higher, respectively, than the comparable periods last year. The increase in
income was due primarily to sales of products with higher gross margins and
improved operating efficiencies.
Consolidated gross profits increased 10 percent in the third quarter due
primarily to higher sales in the Electronics segment. Third quarter selling and
administrative expenses increased 5 percent compared to the prior year.
Consolidated operating income rose 16 percent, to $3.6 million, as a result. The
income tax rate of 35.5 percent was unchanged from the prior 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, Finance, Secretary,
and Treasurer (Principal Financial
and Accounting Officer)
DATE: DECEMBER 4, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> OCT-31-1996
<CASH> 1,960
<SECURITIES> 0
<RECEIVABLES> 21,580
<ALLOWANCES> 337
<INVENTORY> 26,402
<CURRENT-ASSETS> 51,549
<PP&E> 47,320
<DEPRECIATION> 29,429
<TOTAL-ASSETS> 73,059
<CURRENT-LIABILITIES> 16,571
<BONDS> 2,618
0
0
<COMMON> 5,093
<OTHER-SE> 47,962
<TOTAL-LIABILITY-AND-EQUITY> 73,059
<SALES> 101,088
<TOTAL-REVENUES> 101,088
<CGS> 82,549
<TOTAL-COSTS> 82,549
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 224
<INCOME-PRETAX> 8,559
<INCOME-TAX> 3,039
<INCOME-CONTINUING> 5,520
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,520
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
</TABLE>
