FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended January 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to __________________
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
incorporation or organization) Identification No.)
205 E. 6th Street, Sioux Falls, South Dakota 57117
(Address of principal offices)(Zip Code)
Registrant's telephone number, including area code (605) 336-2750
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common stock, $1 par value NASDAQ National Market System
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by checkmark 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 twelve months, and (2) has been subject to such filing
requirements for the past ninety days.
Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
Registrant, based on the closing price of $16.375 per share as reported on the
NASDAQ National Market System on April 15, 1996 was $68,726,399.
Shares of common stock outstanding at April 15, 1996: 4,716,076.
DOCUMENTS INCORPORATED BY REFERENCE
The following table shows, except as otherwise noted, the location of
information, required in this Form 10-K, in the registrant's Annual Report to
Shareholders for the year ended January 31, 1996 and Proxy Statement for
registrant's 1996 annual meeting, a definitive copy of which is to be filed on
April 17, 1996. All such information set forth under the heading "Reference"
herein below is incorporated herein by reference. A copy of the registrant's
Annual Report to Shareholders for the year ended January 31, 1996 is included in
this report.
PART I. ITEM IN FORM 10-K REFERENCE
Item 1. Business Business, pages 4-7, this
document and Business
Segments, page 12,
Annual Report to Share
holders
Item 2. Properties Properties, pages 8-9, this
document
Item 3. Pending Legal Pending Legal Proceedings,
Proceedings page 9, this document
Item 4. Submission of Matters Submission of Matters to a
to a Vote of Vote of Security
Security Holders Holders, page 9, this
document
PART II.
Item 5. Market for the Regis- Quarterly Summary, page 21,
trant's Common Eleven-year Financial
Equity and Related Summary, pages 14-15,
Stockholder Matters and inside back cover,
Annual Report to
Shareholders
Item 6. Selected Financial Data Eleven-Year Financial
Summary, pages 14-15,
Annual Report to
Shareholders
Item 7. Management's Discussion Financial Review and
and Analysis of Analysis, pages 16-20,
Financial Condition Annual Report to Share
and Results of holders
Operations
Item 8. Financial Statements and Annual Report to Share-
Supplementary Data holders, pages 22-31
Item 9. Changes in and Disagree- Changes in and Disagree-
ments with Account- ments with Accountants
ants on Accounting on Accounting and
and Financial Financial Disclosure,
Disclosure page 10, this document
PART III. ITEM IN FORM 10-K REFERENCE
Item 10. Directors of the Regis- Election of Directors and
trant Executive Compensation,
Proxy Statement
Executive Officers of Executive Officers of
the Registrant Registrant, page 10,
this document and other
matters, Proxy
Statement
Item 11. Executive Compensation Executive Compensation,
Proxy Statement
Item 12. Voting Securities and Ownership of Common Stock,
Principal Holders Proxy Statement
Thereof
Item 13. Certain Relationships Election of Directors,
and Related Proxy Statement
Transactions
PART IV.
Item 14. Exhibits, Financial Exhibits, Financial
Statement Schedule Statement Schedule
and Reports on Form and Reports on Form
8-K. 8-K, pages 10-12,
this document.
RAVEN INDUSTRIES, INC.
FORM 10-K
year ended January 31, 1996
Item 1. Business
General
Raven Industries, Inc. was incorporated in February 1956 under the laws
of the State of South Dakota and began operations later that same year. The
following terms - the company, Raven or the registrant - are intended to apply
to Raven Industries, Inc. and its consolidated subsidiaries listed in Exhibit 21
to this report. Raven is headquartered in Sioux Falls, South Dakota, employing
approximately 1,400 persons in seven states.
The company began operations as a manufacturer of high altitude
research balloons. It has diversified over the years to supply specialized
products for a number of markets, including industrial, recreation, agriculture,
automotive and defense. Many of these product lines are an extension of
technology and production methods developed in the original balloon business.
The automotive product lines were added via acquisition in fiscal 1987.
The company has three business segments: Electronics, Plastics and Sewn
Products. Product lines have been grouped in these segments based on common
technologies, production methods and raw materials. However, the product markets
identified above may be served by more than one business segment. Page 12 in the
company's Annual Report to Shareholders, incorporated herein by reference,
provides financial information concerning the three business segments.
Business Segments
Electronics - Historically, this segment has provided a wide variety of
assemblies and controls to the U.S. Department of Defense and other defense
contractors. The company is expanding this segment's capabilities in contract
electronics assembly for commercial customers to offset a continuing decline in
defense contracts. Assemblies manufactured by the Electronics segment include
communication, computer and other products where high quality is critical. Flow
control devices, used primarily for precision farming applications, are designed
and produced within this business segment. These devices are also used for
roadside and turf spraying. Management believes that acquisition of new
technologies for height and depth control will expand the company's capabilities
to support precision farming in future years. The segment also builds and
installs automated control systems for use in feedmills and bakery plants.
Defense and other contract electronics assembly sales are made in
response to competitive bid requests by defense agencies or other contractors.
The level and nature of competition varies with the type of product, but the
company frequently competes with a number of assembly manufacturers on any given
bid request. Flow control devices are mainly sold directly by home office
personnel to original equipment manufacturers (OEMs) and distributors. Company
sales representatives sell automated systems directly to feedmills and bakeries.
Considerable competition exists for feedmill business while the bakery systems
business is relatively new, with no established market.
Plastics - Segment products include heavy-duty sheeting for a number of
markets; fiberglass and polyethylene tanks for industrial and agricultural use;
high altitude balloons for public and commercial research and pickup-truck
toppers sold in the small truck aftermarket. Plastic sheeting is used as a
protective covering in construction, industrial and oilfield operations and
agriculture.
The company sells plastic sheeting to distributors in each of the
various markets it serves. There are several suppliers of sheeting in the U.S.,
competing on both price and product availability. The company believes it is one
of the largest sheeting converters. The company extrudes all of the films used
for producing high altitude balloons and a significant portion of the film
converted for other commercial uses. Storage tanks are sold both by home office
personnel and manufacturer's representatives, to OEMs and through distributors.
Competition comes not only from many other plastic tank manufacturers, but also
from manufacturers using other materials (aluminum and steel). The company makes
a number of custom fiberglass products, but polyethylene tanks tend to be
commodity products and subject to intense price competition.
Research balloons are sold directly to public agencies (usually funded
by NASA) or commercial users. Demand is small but stable. Raven is the largest
balloon supplier for high-altitude research in the United States. Pickup-truck
toppers are sold throughout the U.S. through a dealer network. The overall
market for toppers, which declined in the late 1980's and early 1990's as
alternatives to pickups with toppers, primarily minivans and sport utility
vehicles increased in popularity, has recovered due to strong sales of pickup
trucks. The number of topper manufacturers has fallen but is still substantial.
Sewn Products - This segment produces and sells outerwear for a wide
variety of recreational activities, including skiing, hunting and fishing. The
U.S. Department of Defense has also been a major customer of this segment,
purchasing decelerator devices and clothing, such as extreme-cold weather
uniforms and chemical protective suits. Military sales in this segment declined
significantly in fiscal 1995 and 1996 as the Company shifted its production
capacity to commercial products. The segment also manufactures sport balloons
principally for recreational use. Another major product is large inflatable
devices, which enjoy a number of uses, such as parade floats and advertising
media.
Recreational outerwear is sold both to retailers through an independent
sales representative network, and by home office personnel to catalog retailers.
There are numerous outerwear manufacturers in the U.S. and abroad and
considerable competition exists. The company competes successfully in the
medium-to-higher priced range of the market where specialty fabrics such as
GoreTex (R) are involved, emphasizing quality, service and manufacturing
expertise.
The segment sells balloons through a dealer network. Raven is the
originator of modern hot-air ballooning and continues to be a leader in design
and technical expertise. The company believes it has approximately 40 percent of
the U.S. hot-air balloon market, although others are able to compete with
lower-cost products. Inflatables are sold direct to corporate customers and are
subject to varying levels of competition, generally, the more customized the
product, the greater the company's market share.
Major Customer Information
No customer accounted for more than 10 percent of consolidated sales in
fiscal 1996. However, the company sells sewn products to several large
customers. In fiscal 1996, the top five customers in the Sewn Products segment
accounted for more than 60 percent of sales in that segment. Although the loss
of these accounts would adversely affect profitability, the company believes
that, over the long term, addition of new customers and sales growth from
existing customers would replace any lost sales.
Seasonality/Working Capital Requirements
Some seasonality in demand exists for the company's outerwear products,
many of which are built in spring/summer for summer/fall delivery. The majority
of these sales carry net 30 day terms, although some winter-dated terms are
available. Sales to the agricultural market (flow controls, plastic tanks) also
experience some seasonality, building in the fall for winter/spring delivery.
Some plastics and flow controls sales offer extended dating terms as well. The
resulting fluctuations in inventory and accounts receivable balances may require
and have required seasonal short-term financing.
Raw Materials
The company obtains a wide variety of materials from numerous vendors.
Principal materials include numerous electronic components for the Electronics
segment; various plastic resins for the Plastics segment; and fabric for the
Sewn Products segment. The company has not experienced any significant shortages
or other problems in purchasing raw materials to date, and alternative sources
of supply are generally available. However, it is impossible to predict future
material shortages and their impact on Raven.
Patents
The company owns a number of patents. However, Raven does not believe
that its business as a whole is materially dependent on any one patent or
related group of patents. It believes the successful manufacture and sale of its
products generally depend more upon its technical expertise and manufacturing
skills.
Research and Development
The industry segments noted above conduct ongoing research and
development efforts. The majority of the company's research and development
expenditures are directed towards new products in the Electronics and Plastics
segments. Total company research and development costs are disclosed in Note 1
to the consolidated financial statements located on page 25 of the Annual Report
to Shareholders, incorporated herein by reference.
Environmental Matters
Raven believes that it is in compliance in all material respects with
applicable federal, state and local environmental laws and regulations.
Expenditures relating to compliance for operating facilities incurred in the
past and anticipated in the future have not materially affected capital
expenditures, earnings or competitive position.
Backlog
As of February 1, 1996, the company's backlog of firm orders totaled
$32.5 million. Comparable backlog amounts as of February 1, 1995 and 1994 were
$29.7 million and $36.4 million, respectively.
Item 2. Properties
<TABLE>
<CAPTION>
Location General Character Ownership
<S> <C> <C>
205 E. 6th Street 150,000 square feet, 6 stories, corporate offices In Fee
Sioux Falls, South Dakota and manufacturing facility for electronics and
sewn products
12 acres of land with buildings, (1) 59,120 square feet, building for research In Fee
located at Airbase, Sioux Falls, and hot-air balloon manufacturing
South Dakota
(2) 73,400 square feet, building for manufac- In Fee
ture and storage of plastic tank products
(3) 10,080 square feet, machine shop In Fee
10 acres of land with buildings, (1) 31,392 square feet, building for plastic In Fee
located at Airbase, Sioux Falls, tank manufacturing plus offices
South Dakota
(2) 52,500 square feet, building for extrusion In Fee
and manufacturing of plastic sheeting
(3) 20,450 square feet, building for inflatable In Fee
manufacturing
200 E. 6th Street 29,000 square feet, offices and sewing facility In Fee*
Sioux Falls, South Dakota
196 E. 6th Street 68,000 square feet, sewn products warehouse In Fee
Sioux Falls, South Dakota building
100 E. 6th Street 6,200 square feet, training/meeting center In Fee
Sioux Falls, South Dakota
Dunnell, Minnesota 83,800 square feet, three buildings, for pickup In Fee
topper offices, manufacturing plant and truck
maintenance shop
Eloy, Arizona 51,600 square feet, pickup truck topper In Fee
manufacturing plant
St. Louis, Missouri 21,000 square feet, electronic control systems In Fee**
sales and manufacturing plant
Albertville, Alabama 39,000 square feet, plastic tank manufacturing In Fee
plant
Gordo, Alabama 21,000 square feet, feed and bakery mixing Leased,
and weighing device manufacturing Short-
term
Springfield, Ohio 22,500 square feet, reinforced plastic sheeting Leased,
sales and manufacturing plant Short-
term
5 acres of land located at Construction site for 30,000 square feet reinforced In Fee
Springfield, Ohio plastic sheeting manufacturing plant to be completed
in 1997.
Washington Court House, Ohio 22,000 square feet, plastic tank manufacturing plant In Fee*
plus 3,150 square feet sheltered outside storage
6.95 acres of land located at Undeveloped land adjacent to other Company In Fee
Airbase, Sioux Falls, South Dakota property
Beresford, South Dakota 20,000 square feet, sewing plant Leased,
Short-
term
Huron, South Dakota 24,100 square feet, sewing plant In Fee*
Parkston, South Dakota 14,000 square feet, sewing plant In Fee
Salem, South Dakota 15,000 square feet, sewing plant In Fee
DeSmet, South Dakota 15,000 square feet, sewing plant In Fee
Madison, South Dakota 20,000 square feet, sewing plant In Fee*
</TABLE>
*Subject to repayment of mortgage
**Subject to repayment of Industrial
Revenue Bonds
The company believes that its properties are in good condition and are adequate
for the present needs of its business.
Item 3. Pending Legal Proceedings
There are no pending legal proceedings wherein the claim for damages exceeds 10%
of the registrant's current assets.
Item 4. Submission of Matters to a Vote of Security Holders
There was no matter submitted during the fourth quarter to a vote of security
holders.
Item 9. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
None
Item 10. Executive Officers of the Registrant
Name Age Position Period Served
David A. Christensen 61 President and Chief April 1971 to present
Executive Officer
Gary L. Conradi 56 Vice President, January 1980 to present
Corporate Services
Ronald M. Moquist 50 Executive Vice January 1979 to present
President
Arnold J. Thue 57 Vice President, January 1980 to present
Finance,Secretary
and Treasurer
Each of the above named individuals serves at the pleasure of the Board of
Directors. Each serves on a year-to-year basis.
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
(a) Consolidated Financial Statements and Schedule
1. Incorporated by reference from the attached 1996
Annual Report to Shareholders:
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Accountants
2. Included in Part II:
Report of Independent Accountants on Financial
Statement Schedule
Schedule II - Valuation and Qualifying Accounts
The following schedules are omitted for the reason that
they are not applicable or are not required: I, III and
IV.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the fourth
quarter ended January 31, 1996.
(c) Exhibits filed
Exhibit
Number Description
3(a) Articles of Incorporation of Raven Industries, Inc.
and all amendments thereto.*
3(b) By-Laws of Raven Industries, Inc.*
3(c) Extract of Shareholders Resolution adopted on April
7, 1962 with respect to the by-laws of Raven
Industries, Inc.*
4(a) Rights Agreement dated as of March 16, 1989 between
Raven Industries, Inc. and Norwest Bank Minnesota,
National Association (incorporated by reference to
Exhibit 1 to the Company's Report on Form 8-K dated
March 16, 1989).
10(a) Change in Control Agreement between Raven Industries,
Inc. and David A. Christensen dated as of March 17,
1989.*
10(b) Change in Control Agreement between Raven Industries,
Inc. and Gary L. Conradi dated as of March 17, 1989.*
10(c) Change in Control Agreement between Raven Industries,
Inc. and Ronald M. Moquist dated as of March 17,
1989.*
10(d) Change in Control Agreement between Raven Industries,
Inc. and Arnold J. Thue dated as of March 17, 1989.*
10(f) The Raven Industries, Inc. Health and Survivor
Benefit Plan.*
10(g) The Raven Industries, Inc. Post-Retirement Health and
Survivor Benefit Plan.*
10(h) Deferred Compensation Plan between Raven Industries,
Inc. and David A. Christensen dated as of June 1,
1986.*
10(i) Trust Agreement between Raven Industries, Inc. and
Norwest Bank South Dakota, N.A. dated April 26,
1989.*
10(n) Form of Incentive Stock Option Agreements.*
10(o) Form of Nonqualified Stock Option Agreements.*
10(p) Form of Amendment Agreement relating to outstanding
Incentive Stock Options.*
10(q) Raven Industries, Inc. 1990 Stock Option Plan adopted
January 30, 1990 (incorporated by reference to
Exhibit A to the Company's definitive Proxy Statement
filed April 25, 1990).
11 Detailed Computation of Earnings per Share.
13 1996 Annual Report to Shareholders (only those
portions specifically incorporated herein by
reference shall be deemed filed with the Commission).
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
27 Financial Data Schedule (for S.E.C. only).
* Incorporated by reference to corresponding Exhibit
Number of the Company's Form 10-K for the year ended
January 31, 1989.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
(Registrant)
April 17, 1996 By: /S/ David A. Christensen
Date David A. Christensen
President (Principal Executive
Officer and Director)
Pursuant to the requirements of Section 13 or 15(d) 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.
April 17, 1996 By: /S/ David A. Christensen
Date David A. Christensen
President (Principal Executive
Officer and Director)
April 17, 1996 /S/ Arnold J. Thue
Date Arnold J. Thue
Vice President, Finance,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
Directors:
April 17, 1996 /S/ Conrad J. Hoigaard
Date Conrad J. Hoigaard
April 17, 1996 /S/ John C. Skoglund
Date John C. Skoglund
April 17, 1996 /S/ Mark E. Griffin
Date Mark E. Griffin
April 17, 1996 /S/ Kevin T. Kirby
Date Kevin T. Kirby
April 17, 1996 /S/ Anthony W. Bour
Date Anthony W. Bour
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders of
Raven Industries, Inc.:
Our report on the consolidated financial statements of Raven
Industries, Inc. and Subsidiaries has been incorporated by reference in this
Form 10-K from page 32 of the 1996 Annual Report to Shareholders of Raven
Industries, Inc. In connection with our audits of such financial statements, we
have also audited the related financial statement schedule listed in Item
14.(a)2. on page 10 of this Form 10-K.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Minneapolis, Minnesota
March 7, 1996
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended January 31, 1996, 1995 and 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- ---------- ------------------------ ----------- --------
Additions
------------------------
Balance at Charged to Charged to Deductions
Beginning Costs and Other From Balance at
Description of Year Expenses Accounts Reserves(1) End of Year
<S> <C> <C> <C> <C> <C>
Deducted in the balance sheet
from the asset to which it
applies:
Allowance for doubtful
accounts:
Year ended January 31, 1996 $350 $ 68 None $ 78 $340
==== ==== ==== ====
Year ended January 31, 1995 $350 $135 None $135 $350
==== ==== ==== ====
Year ended January 31, 1994 $335 $180 None $165 $350
==== ==== ==== ====
</TABLE>
Note:
(1) Represents uncollectible accounts receivable written off during the
year, net of recoveries.
EXHIBIT 11
DETAILED COMPUTATION OF EARNINGS PER SHARE
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended January 31
------------------------------------
PER SHARE DATA 1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net income $ 6,197 $ 6,088 $ 6,954
========== ========== ==========
Net income per common and common equivalent shares:
Primary $ 1.30 $ 1.27 $ 1.45
========== ========== ==========
Fully diluted (1) $ 1.29 $ 1.27 $ 1.45
========== ========== ==========
AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES
Primary:
Weighted average number of common
shares outstanding 4,735,223 4,726,026 4,683,812
Common equivalent shares:
Dilutive stock options, using
Treasury Stock Method 46,962 65,057 111,983
---------- ---------- ----------
4,782,185 4,791,083 4,795,795
========== ========== ==========
Fully diluted (1):
Weighted average number of common
shares outstanding 4,735,223 4,726,026 4,683,812
Common equivalent shares:
Dilutive stock options, using
Treasury Stock Method 51,227 65,057 111,983
---------- ---------- ----------
4,786,450 4,791,083 4,795,795
========== ========== ==========
</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%.
BUSINESS SEGMENTS
<TABLE>
<CAPTION>
(Dollars in thousands) Years ended January 31
1996 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ELECTRONICS
Sales ..................... $ 32,962 $ 31,959 $ 35,771 $ 34,538 $ 35,243 $ 26,420
Operating income .......... 4,600 2,753(a) 4,529 5,146 5,963 3,006
Identifiable assets ....... 19,204 16,912 18,838 19,082 15,622 12,832
Capital expenditures ...... 807 552 985 953 823 714
Depreciation & amortization 1,077 872 804 712 639 470
PLASTICS
Sales ..................... $ 55,281 $ 48,971 $ 40,386 $ 36,070 $ 31,568 $ 32,998
Operating income .......... 3,267 3,470 2,815 2,625 2,406 2,045
Identifiable assets ....... 26,092 25,817 16,796 13,769 12,874 13,977
Capital expenditures ...... 2,973 6,387 3,587 1,305 1,194 926
Depreciation & amortization 2,414 1,845 1,263 1,245 1,302 1,417
SEWN PRODUCTS
Sales ..................... $ 32,201 $ 40,790 $ 45,311 $ 40,606 $ 33,798 $ 26,084
Operating income (loss) ... 1,694 2,913 3,096 1,375 (231) 2,260
Identifiable assets ....... 13,934 16,384 16,510 17,760 12,879 13,819
Capital expenditures ...... 396 765 1,141 888 1,620 1,419
Depreciation & amortization 719 832 803 683 570 355
CORPORATE & OTHER
Identifiable assets ....... $ 8,323 $ 6,523 $ 8,453 $ 4,202 $ 5,153 $ 3,475
Capital expenditures ...... 10 49 71 13 235 118
Depreciation & amortization 32 33 27 23 26 27
TOTAL COMPANY
Sales ..................... $ 120,444 $ 121,720 $ 121,468 $ 111,214 $ 100,609 $ 85,502
Operating income .......... 9,561 9,136(a) 10,440 9,146 8,138 7,311
Identifiable assets ....... 67,553 65,636 60,597 54,813 46,528 44,103
Capital expenditures ...... 4,186 7,753 5,784 3,159 3,872 3,177
Depreciation & amortization 4,242 3,582 2,897 2,663 2,537 2,269
</TABLE>
(a) Includes the $1.8 million Beta Raven charge (See Note 4).
PRODUCT LINES BY BUSINESS SEGMENT
[GRAPHIC]
AN ELECTRONICS GRAPHIC
* Contract electronics assembly
* Flow controls-precision farming
* Feedmill and bakery automation
* Military radio assemblies
[GRAPHIC]
A PLASTICS GRAPHIC
* Sheeting
* Storage/sprayer tanks
* Research balloons
* Pickup-truck toppers
[GRAPHIC]
A SEWN PRODUCTS GRAPHIC
* Performance outerwear
* Sport balloons
* Inflatables
12
<PAGE>
ELEVEN-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)
Years ended January 31 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS FOR YEAR
Net sales ................................. $ 120,444 $ 121,720 $ 121,468 $ 111,214 $ 100,609
Gross profit .............................. 22,660 23,968 23,574 21,048 19,109
Operating income .......................... 9,561 9,136(a) 10,440 9,146 8,138
Pretax income ............................. 9,566 9,372 10,638 9,182 8,067
Net income ................................ 6,197 6,088 6,954 6,030 5,306
Net income % of sales ..................... 5.1% 5.0% 5.7% 5.4% 5.3%
Net income % of beginning equity .......... 13.6% 14.8% 19.6% 19.7% 20.2%
Cash dividends ............................ 2,130 1,843 1,545 1,316 1,165
FINANCIAL POSITION
Current assets ............................ $ 45,695 $ 43,795 $ 45,037 $ 42,476 $ 34,798
Current liabilities ....................... 14,771 15,078 16,088 15,253 11,284
Working capital ........................... 30,924 28,717 28,949 27,223 23,514
Current ratio ............................. 3.09 2.90 2.80 2.78 3.08
Net plant and equipment ................... 18,069 18,570 13,371 10,457 9,947
Total assets .............................. 67,553 65,636 60,597 54,813 46,528
Long-term debt ............................ 2,816 4,179 2,539 3,224 3,676
Shareholders' equity ...................... 49,151 45,526 41,100 35,530 30,601
Long-term debt/total capitalization ....... 5.4% 8.4% 5.8% 8.3% 10.7%
Inventory turnover (CGS/year-end inventory) 4.1 4.4 4.4 3.8 4.2
CASH FLOWS PROVIDED BY (USED IN)
Operating activities ...................... $ 9,687 $ 7,452 $ 11,257 $ 3,475 $ 7,489
Investing activities ...................... (4,158) (10,000) (5,908) (3,107) (3,886)
Financing activities ...................... (4,029) 406 (2,042) (1,659) (2,518)
Increase (decrease) in cash ............... 1,500 (2,142) 3,307 (1,291) 1,085
COMMON STOCK DATA
Net income per share ...................... $ 1.30 $ 1.27 $ 1.45 $ 1.27 $ 1.13
Cash dividends per share .................. 0.45 0.39 0.33 0.28 0.25
Book value per share ...................... 10.28 9.62 8.76 7.60 6.63
Stock price range during year
High ................................... 20.75 24.50 23.50 21.50 15.83
Low .................................... 15.50 18.00 18.00 13.83 8.00
Shares outstanding, average (in thousands) 4,782 4,791 4,796 4,763 4,713
Shares outstanding, year-end (in thousands) 4,716 4,735 4,694 4,676 4,629
Number of shareholders, year-end .......... 3,190 3,031 3,173 3,147 2,775
OTHER DATA
Average number of employees ............... 1,368 1,414 1,435 1,316 1,252
Sales per employee ........................ $ 88 $ 86 $ 85 $ 85 $ 80
Backlog ................................... $ 32,539 $ 29,661 $ 36,403 $ 49,033 $ 48,200
(WIDE TABLE CONTINUED)
Years ended January 31 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------
OPERATIONS FOR YEAR
Net sales ................................. $ 85,502 $ 90,973 $ 77,563 $ 64,305 $ 52,303 $ 41,899
Gross profit .............................. 17,685 18,177 14,857 14,292 12,303 9,538
Operating income .......................... 7,311 7,461 5,127 4,983 4,250 2,518
Pretax income ............................. 7,071 6,831 4,578 4,390 3,919 2,412
Net income ................................ 4,605 4,235 2,930 2,656 2,122 1,611
Net income % of sales ..................... 5.4% 4.7% 3.8% 4.1% 4.1% 3.8%
Net income % of beginning equity .......... 20.2% 19.7% 15.3% 15.5% 13.5% 11.0%
Cash dividends ............................ 1,014 849 732 680 659 653
FINANCIAL POSITION
Current assets ............................ $ 33,900 $ 30,570 $ 24,976 $ 21,795 $ 18,416 $ 17,932
Current liabilities ....................... 12,147 11,247 9,633 8,799 6,621 5,177
Working capital ........................... 21,753 19,323 15,342 12,997 11,795 12,755
Current ratio ............................. 2.79 2.72 2.59 2.48 2.78 3.46
Net plant and equipment ................... 8,368 7,163 8,702 9,672 7,855 5,047
Total assets .............................. 44,103 39,547 35,892 33,920 28,847 23,899
Long-term debt ............................ 4,679 4,966 4,115 5,254 4,485 2,742
Shareholders' equity ...................... 26,236 22,802 21,448 19,170 17,155 15,659
Long-term debt/total capitalization ....... 15.1% 17.5% 15.7% 20.9% 20.2% 14.6%
Inventory turnover (CGS/year-end inventory) 3.4 4.1 4.6 4.1 3.5 4.5
CASH FLOWS PROVIDED BY (USED IN)
Operating activities ...................... $ 5,583 $ 2,404 $ 3,908 $ 4,108 $ 2,046 $ 2,721
Investing activities ...................... (3,113) (1,308) (1,331) (3,598) (4,545) (1,733)
Financing activities ...................... (2,071) (1,875) (1,869) 274 (1,084) (542)
Increase (decrease) in cash ............... 399 (779) 708 784 (3,583) 446
COMMON STOCK DATA
Net income per share ...................... $ 0.98 $ 0.87 $ 0.61 $ 0.55 $ 0.45 $ 0.34
Cash dividends per share .................. 0.22 0.18 0.15 0.14 0.14 0.14
Book value per share ...................... 5.77 5.01 4.48 4.03 3.63 3.34
Stock price range during year
High ................................... 9.75 10.00 5.75 7.09 5.59 4.87
Low .................................... 6.42 5.33 4.37 4.21 3.59 3.33
Shares outstanding, average (in thousands) 4,704 4,839 4,826 4,811 4,754 4,737
Shares outstanding, year-end (in thousands) 4,559 4,554 4,785 4,758 4,734 4,686
Number of shareholders, year-end .......... 2,526 1,898 1,925 2,000 1,869 1,859
OTHER DATA
Average number of employees ............... 1,141 1,234 1,138 1,019 864 796
Sales per employee ........................ $ 75 $ 74 $ 68 $ 63 $ 61 $ 53
Backlog ................................... $ 53,587 $ 42,078 $ 33,436 $ 21,424 $ 19,808 $ 19,051
</TABLE>
All per share, shares outstanding and market price data reflect the October 1992
three-for-two and the July 1989 two-for-one stock splits. All other figures are
as reported.
(a) Includes the $1.8 million Beta Raven charge (See Note 4).
14 AND 15
<PAGE>
FINANCIAL REVIEW AND ANALYSIS
RESULTS OF OPERATIONS: MARGIN ANALYSIS
(In thousands, except per share data)
<TABLE>
<CAPTION>
FISCAL 1996 Fiscal 1995 Fiscal 1994
% % % % % %
AMOUNT SALES CHANGE Amount Sales Change Amount Sales Change
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales .................. $120,444 100.0 -1.0 $121,720 100.0 + 0.2 $121,468 100.0 + 9.2
Gross profit ............... 22,660 18.8 -5.5 23,968 19.7 + 1.7 23,574 19.4 +12.0
Beta Raven charge .......... 1,800 1.5
Other operating expenses ... 13,099 10.9 +0.5 13,032 10.7 - 0.8 13,134 10.8 +10.4
Operating income ........... 9,561 7.9 +4.7 9,136 7.5 -12.5 10,440 8.6 +14.1
Income before income taxes . 9,566 7.9 +2.1 9,372 7.7 -11.9 10,638 8.8 +15.9
Income taxes ............... 3,369 2.8 +2.6 3,284 2.7 -10.9 3,684 3.0 +16.9
Net income ................. 6,197 5.1 +1.8 6,088 5.0 -12.5 6,954 5.7 +15.3
Net income per share ....... 1.30 +2.4 1.27 -12.4 1.45 +14.2
Average shares outstanding . 4,782 -0.2 4,791 -0.1 4,796 + 0.7
Effective income tax rate .. 35.2% +0.6 35.0% +1.2% 34.6% + 0.9
</TABLE>
LONG-TERM PERFORMANCE
Three factors dominated the company's financial performance in fiscal 1996:
the warm winter of 1994-1995 depressed outerwear sales, startup costs at a new
pickup-truck topper plant were higher than planned, and the loss of defense
orders in the Electronics segment was more rapid than expected. Sales have been
flat over the past three years. Growth in commercial business was offset by the
drop in defense sales to the U.S. government. Commercial sales were $96.7
million in fiscal 1994 and grew to $116.4 million in fiscal 1996. Although the
company continues to bid on defense contracts, this activity is no longer
critical to the success of the company. Defense revenues were only $4.1 million
in fiscal 1996, down from $24.8 million in fiscal 1994.
Net earnings of $6.2 million or $1.30 per share, although below management
expectations, were the second highest in company history. The company returned
nearly 14% on shareholders equity, and 5% on sales; increased the book value of
the company by 7%; paid a record per share dividend and invested for future
growth.
Fiscal years 1996 1995 1994 1993 1992 1991
- --------------------------------------------------------------------
Net income as % of
Sales ............ 5.1% 5.0% 5.7% 5.4% 5.3% 5.4%
Average assets ... 9.3% 9.6% 12.1% 11.9% 11.7% 11.0%
Beginning equity . 13.6% 14.8% 19.6% 19.7% 20.2% 20.2%
16
<PAGE>
SEGMENT ANALYSIS
The following table summarizes sales and gross profits in the company's
three business segments for each of the past three fiscal years:
SALES
(Dollars in thousands)
1996 1995 1994
AMOUNT % CHANGE Amount % Change Amount % Change
- -------------------------------------------------------------------------
Electronics . $ 32,962 + 3.1 $ 31,959 - 10.7 $ 35,771 + 3.6
Plastics .... 55,281 +12.9 48,971 + 21.3 40,386 + 12.0
Sewn Products 32,201 -21.1 40,790 - 10.0 45,311 + 11.6
-------- -------- --------
Total ....... $120,444 - 1.0 $121,720 + 0.2 $121,468 + 9.2
GROSS PROFITS
(Dollars in thousands)
1996 1995 1994
AMOUNT % SALES Amount % Sales Amount % Sales
- ----------------------------------------------------------------------------
Electronics . $ 7,841 23.8 $ 7,581 23.7 $ 7,767 21.7
Plastics .... 9,450 17.1 9,227 18.8 8,164 20.2
Sewn Products 5,369 16.7 7,160 17.6 7,643 16.9
-------- -------- --------
Total ....... $22,660 18.8 $23,968 19.7 $23,574 19.4
ELECTRONICS SEGMENT
FISCAL 1996 VERSUS FISCAL 1995
Sales of flow control devices for precision farming increased by more than
30% in fiscal 1996 and totaled nearly $13.5 million. Defense electronics sales
dropped from $10.6 million in fiscal 1995 to $3.9 million in fiscal 1996 as a
result of lower levels of procurement by the U.S. government. Higher deliveries
under commercial contracts partially offset the reduction of defense contract
activity. Beta Raven sales of process control systems were at approximately the
same level as in fiscal 1995. The gross profit increase reflected higher sales
of commercial products. Additionally, improved efficiencies at Beta Raven raised
their gross profit rate. These improvements were partially offset by the impact
of idle capacity that resulted from the drop in defense business.
FISCAL 1995 VERSUS FISCAL 1994
Defense electronics sales decreased from $13.6 million in fiscal 1994 to
$10.6 million in fiscal 1995. Sales of bakery process control systems produced
by the company's Beta Raven subsidiary also declined. Agricultural flow control
devices experienced a 24% sales increase as new products were well received in
the market. An improved overall gross profit rate in the Electronics Segment
partially offset the profit impact of lower sales in fiscal 1995. Agricultural
electronics carried higher margins than the government business replaced.
Profitability also improved on defense shipments in fiscal 1995.
During fiscal 1995, it became apparent that the approach taken by the
company's Beta Raven subsidiary to automate bakeries was more technologically
complex than originally estimated. Raven management assumed more direct control
of this subsidiary, replacing top management. The number of Beta Raven employees
was reduced by 65. Products with high technological risk were de-emphasized or
abandoned. The company incurred a $1.2 million write-down of development costs
and inventories and accrued $.6 million related to cost overruns on bakery
installations and employee severance costs.
PROSPECTS
Order backlog for Electronics segment products at January 31, 1996 was up
more than $4 million from the prior year. The acquisition, in late fiscal 1996,
of additional product offerings for precision farming, if properly integrated
into the existing product line, is expected to increase revenues in fiscal 1997.
Growth projections for the total company depend on more than 40% sales growth in
this segment. Timely delivery of quality products under commercial contracts
during the first half of the year is crucial to obtaining additional orders and
progressing toward a successful year for the company. Meeting the demands of new
technologies and customers is expected to decrease the gross profit rate from
fiscal 1996 levels in this segment.
[GRAPH]
ELECTRONICS SEGMENT
(DOLLARS IN MILLIONS)
GROSS
YEAR SALES PROFITS
'94 35.771 7.767
'95 31.959 7.581
'96 32.962 7.841
PLASTICS SEGMENT
FISCAL 1996 VERSUS FISCAL 1995
Sales of engineered films increased 20% in fiscal 1996 and totaled $23.7
million. Process improvements and expansion of production capacity allowed the
company to meet demand for new products and to supply films needed in response
to hurricane damage in the United States. Sales of plastic tanks increased 20%
as demand for agricultural tanks was strong. Pickup-truck topper sales also
increased, but by less than management expectations. The gross profit impact of
these higher sales was substantially offset by losses incurred during the start
up of a new pickup-truck topper plant. During fiscal 1996, the company sold the
utility-truck body business and related assets. This sale had no material impact
on the financial statements.
[GRAPH]
PLASTICS SEGMENT
(DOLLARS IN MILLIONS)
GROSS
YEAR SALES PROFITS
'94 40.386 8.164
'95 48.971 9.227
'96 55.281 9.450
FISCAL 1995 VERSUS FISCAL 1994
Investments in new capacity for engineered films and pickup-truck toppers
resulted in significant growth in both product lines during fiscal 1995.
Engineered film and research balloon sales were up 29%, and totaled $19.8
million. Pickup-truck topper sales increased 24% and reached $13.5 million.
Sales of industrial plastic tanks increased slightly and agricultural tanks
increased 11%. Start up costs associated with new facilities had a negative
impact on gross profit rates in fiscal 1995. Additionally, the company did not
completely pass on increases in raw material costs to plastic tank customers.
PROSPECTS
Sales are expected to grow between 10-15% in this segment during fiscal
1997. This growth is contingent on improving the productive capacity of our new
pickup-truck topper facility in Arizona, and film lamination equipment. Growth
will also require stronger marketing of large plastic tanks. Gross profit rates
are expected to increase from the depressed levels of fiscal 1996, as operating
results from the pickup-truck topper manufacturing plant improve.
SEWN PRODUCTS SEGMENT
FISCAL 1996 VERSUS FISCAL 1995
The impact of the unusually warm winter of 1994-1995 was to create lower
demand for outerwear and higher than normal retail inventory levels. As a
result, fiscal 1996 sales in the sewn products segment were much lower than the
prior year. Sales to catalog merchandisers were down almost $5 million in fiscal
1996 compared to fiscal 1995. Skiwear sales were also lower than the prior year.
Chemical warfare protection suit production ended in fiscal 1995, but did
contribute $3.3 million to fiscal 1995 sales. Sales of nonmilitary cold weather
uniforms increased over last year. The lower sales negatively impacted the level
of gross profits, and higher levels of low-margin and close-out sales reduced
the gross profit rate.
FISCAL 1995 VERSUS FISCAL 1994
The decline in sales was due primarily to the end of the company's contract
to produce chemical warfare protection suits. Shipments under this contract were
$3.3 million in fiscal 1995 and $9.4 million in fiscal 1994. The company's
chemical suit production facility was converted to commercial production during
the second quarter of fiscal 1995. Demand for hot air balloons and inflatable
displays declined at the company's Aerostar subsidiary. Skiwear sales were also
lower than the prior year due partially to warmer winter weather in the United
States. These declines were partially offset by a $3.5 million increase in sales
to catalog merchandisers. Gross profit rates in this segment benefited from the
reduced level of chemical suit shipments. These suits carried lower margins than
commercial products. Unfavorable production variances and the costs to convert
to commercial production mitigated this favorable impact.
[GRAPH]
SEWN PRODUCTS SEGMENT
(DOLLARS IN MILLIONS)
GROSS
YEAR SALES PROFITS
'94 45.311 7.643
'95 40.790 7.160
'96 32.201 5.369
18
<PAGE>
PROSPECTS
Sales are expected to stay relatively flat in this segment. Penetration of
the nonmilitary uniform market for outerwear continues to be an objective for
fiscal 1997. Gross profits are expected to recover as the result of cost control
measures and improved production efficiencies.
EXPENSES, INCOME TAXES AND OTHER
FISCAL 1996 VERSUS FISCAL 1995
Selling and administrative costs were essentially unchanged, both as a
percent of sales and in spending levels. Marketing support for precision farming
equipment increased selling expenses, along with higher levels of commissionable
sales. Interest expense increased as a result of financing capital expenditures
made in late fiscal 1995. The effective income tax rate was 35.2% in fiscal 1996
and 35.0% in fiscal 1995.
FISCAL 1995 VERSUS FISCAL 1994
Operating expenses were 10.7% of sales in fiscal 1995, compared to 10.8% in
fiscal 1994. Selling expenses increased by 1.8% and administrative expense
declined by 3.7%. The lower expense level was due to cost reductions, including
lower management incentives. Interest expense was essentially unchanged as lower
borrowing levels in the first half of the year were offset by higher borrowings
to finance fixed asset additions and acquisitions in the last half of fiscal
1995. The effective income tax rate was 35.0% in fiscal 1995 compared to 34.6%
in fiscal 1994. The higher rate was the result of increased state income taxes
and reduced tax deductibility of expenses under new federal tax legislation.
PROSPECTS
Operating expenses are expected to increase by more than 10%, but should be
reduced as a percentage of sales in fiscal 1997. Interest costs are projected to
rise along with increased working capital requirements in the coming year. The
company's effective income tax rate is expected to rise to the 35.5% range.
ANALYSIS OF FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes cash provided by (used in) the company's
business activities for the past three fiscal years:
(Dollars in thousands)
1996 1995 1994
- ---------------------------------------------------------------
Operating activities ...... $ 9,687 $ 7,452 $ 11,257
Investing activities ...... (4,158) (10,000) (5,908)
Financing activities ...... (4,029) 406 (2,042)
Increase (decrease) in cash $ 1,500 $ (2,142) $ 3,307
OPERATING ACTIVITIES
The company's cash flow from operations totaled $28.4 million over the past
three years, compared to net income of $19.2 million over the same period.
Accounts receivable decreased by $1.5 million in fiscal 1996, due primarily to
higher shipment levels in January 1995 than in January 1996 and collection of
past-due accounts at the company's Beta Raven subsidiary. Inventory increased
$1.8 million, primarily to support Electronics segment shipments in the first
half of the coming fiscal year. Working capital requirements are projected to
grow along with revenues in fiscal 1997.
INVESTING ACTIVITIES
Capital expenditures totaled $4.2 million in fiscal 1996, a decrease of
$3.6 million from the prior year and at approximately the same level as
depreciation and amortization. Expenditures were to complete the new
pickup-truck topper manufacturing facility and to support other new capacity in
the Plastics and Electronics segments. The company acquired certain product
rights to depth control technology for its precision farming business for
approximately $500,000. Cash proceeds from disposal of utility-truck body assets
were approximately $500,000. In fiscal 1997, capital expenditures are expected
to approximate depreciation.
19
<PAGE>
FINANCING ACTIVITIES AND CREDIT LINES
The company increased its dividend, on a per share basis, for the ninth
consecutive year. Cash balances increased and long-term debt declined by $1.5
million each.
Maximum borrowings under the company's line of credit were $1.5 million
during fiscal 1996, compared to $5.0 million in fiscal 1995. Average daily
borrowings were $260,000 in fiscal 1996 and $2.2 million in the prior year.
Management believes the $6.0 million line of credit will be adequate to meet its
working capital needs during fiscal 1997.
CAPITAL STRUCTURE AND LONG-TERM FINANCING
Long-term debt decreased by $1.5 million in fiscal 1996 and the company's
long-term debt to total capitalization ratio was 5.4% at January 31, 1996,
compared to 8.4% one year earlier. Refer to Note 8 to the consolidated financial
statements for types and sources of long-term debt. Using a prime rate of 8.5%,
the weighted average interest rate of the company's debt was 7.7% at January 31,
1996. No new long-term borrowing is planned for fiscal 1997.
The company's solid financial condition and capacity to assume additional
financing, if needed, provide the company a strategic advantage over many of its
competitors. In the opinion of management, the company is well-positioned to
take on new business opportunities with emphasis on those that build on the
company's strengths of customer service and quality manufacturing.
PERFORMANCE: RAVEN VS. PEER GROUP & S&P 500
5-YEAR RETURN ON $100 INVESTMENT
[LINE CHART]
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
As of S&P Div.
Jan. 31: Raven S&P 500 Manufacturers
- ---------------------------------------------------
1996 $ 257.55 $213.15 $ 231.70
1995 245.01 153.83 158.15
1994 256.31 152.99 158.20
1993 248.94 135.61 127.98
1992 182.75 122.65 119.11
1991 100.00 100.00 100.00
Source: S&P Compustat Base year=100
THE GRAPH ASSUMES $100 INVESTED ON JANUARY 31, 1991 IN THE COMPANY'S COMMON
STOCK AND EACH OF THE INDICES.
20
<PAGE>
WEEKLY STOCK PRICE AND VOLUME -- FISCAL 1996
[LINE AND BAR CHART]
WEEKLY STOCK PRICE AND VOLUME -- FISCAL 1996
DATE PRICE VOLUME
[LINE CHART] [BAR CHART]
1995
FEB 2/24 19 1/4 21100.0
2/17 17 3/4 21200.0
2/10 18 1/2 27500.0
2/ 3 17 1/4 22200.0
MAR 3/31 20 1/2 5400.00
3/24 20 15300.0
3/17 19 23500.0
3/10 18 49800.0
3/ 3 19 1/2 17800.0
APR 4/28 20 1/2 5900.00
4/21 19 1/4 12100.0
4/14 19 3700.00
4/ 7 19 2800.00
MAY 5/26 19 7/8 50400.0
5/19 19 7/8 23000.0
5/12 19 7/8 77500.0
5/ 5 19 1/2 5500.00
JUN 6/30 19 3/4 45700.0
6/23 19 1/2 110400
6/16 19 3/4 7100.00
6/ 9 20 1/2 76400.0
6/ 2 20 1/2 32500.0
JUL 7/28 20 1/2 43700.0
7/21 20 1/2 23300.0
7/14 19 1/2 15000.0
7/ 7 20 13100.0
AUG 8/25 17 3/4 29300.0
8/18 20 11900.0
8/11 19 3/4 22100.0
8/ 4 19 1/2 14600.0
SEP 9/29 18 15400.0
9/22 18 9600.00
9/15 18 22000.0
9/ 8 19 7200.00
9/ 1 19 20500.0
OCT 10/27 17 7/8 48000.0
10/20 17 7/8 25000.0
10/13 19 1/4 84500.0
10/ 6 19 1/4 14100.0
NOV 11/24 16 1/2 73700.0
11/17 16 3/4 11400.0
11/10 18 1/2 1000.00
11/ 3 18 47300.0
DEC 12/29 18 1/4 8200.00
12/22 17 15800.0
12/15 17 33000.0
12/ 8 16 1/2 91700.0
12/ 1 16 1/4 64300.0
1996
JAN 1/26 18 1/2
1/19 17 3/4 10500.0
1/12 18 19800.0
1/ 5 18 1/4 9000.00
QUARTERLY SUMMARY (UNAUDITED)
DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Common stock
Net Gross Operating Pretax Net Net income market price Dividends
sales profit income income income per share High Low per share
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FISCAL 1996
FIRST QUARTER $ 27,787 $ 5,776 $ 2,404 $ 2,380 $ 1,535 $ 0.32 $ 20.50 $ 17.25 $ 0.105
SECOND QUARTER 27,253 4,795 1,675 1,732 1,117 0.23 20.75 19.50 0.105
THIRD QUARTER 35,560 6,400 3,115 3,057 1,972 0.41 20.50 17.50 0.120
FOURTH QUARTER 29,844 5,689 2,367 2,397 1,573 0.34 19.25 15.50 0.120
-------- -------- -------- -------- -------- --------- -------
TOTAL YEAR $120,444 $ 22,660 $ 9,561 $ 9,566 $ 6,197 $ 1.30 $ 20.75 $ 15.50 $ 0.450
======== ======== ======== ======== ======== ========= =======
FISCAL 1995
First quarter $ 27,816 $ 5,360 $ 2,046 $ 2,134 $ 1,376 $ 0.29 $ 24.50 $ 19.75 $ 0.090
Second quarter 26,919 5,044 137(a) 182 130 0.03 22.50 18.50 0.090
Third quarter 35,890 7,200 3,880 3,877 2,519 0.53 20.00 18.00 0.105
Fourth quarter 31,095 6,364 3,073 3,179 2,063 0.42 20.00 18.25 0.105
-------- -------- -------- -------- -------- --------- -------
Total year $121,720 $ 23,968 $ 9,136 $ 9,372 $ 6,088 $ 1.27 $ 24.50 $ 18.00 $ 0.390
======== ======== ======== ======== ======== ========= =======
FISCAL 1994
First quarter $ 25,278 $ 5,241 $ 2,206 $ 2,185 $ 1,420 $ 0.30 $ 20.63 $ 18.25 $ 0.075
Second quarter 30,529 5,877 2,697 2,747 1,786 0.37 23.50 18.00 0.075
Third quarter 34,758 6,657 3,277 3,351 2,178 0.45 22.25 19.00 0.090
Fourth quarter 30,903 5,799 2,260 2,355 1,570 0.33 22.75 19.25 0.090
-------- -------- -------- -------- -------- --------- -------
Total year $121,468 $ 23,574 $ 10,440 $ 10,638 $ 6,954 $ 1.45 $ 23.50 $ 18.00 $ 0.330
======== ======== ======== ======== ======== ========= =======
</TABLE>
(a) Includes the $1.8 million Beta Raven charge (See Note 4).
21
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Dollars in thousands) January 31
1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ......................... $ 3,804 $ 2,304 $ 4,446
Accounts receivable ............................... 16,002 17,592 16,540
Inventories ....................................... 23,897 22,103 22,224
Prepaid expenses and other current assets ......... 413 382 425
Deferred income taxes ............................. 1,579 1,414 1,402
------- ------- -------
Total current assets ............................ 45,695 43,795 45,037
Property, plant and equipment ........................ 18,069 18,570 13,371
Other assets ......................................... 3,789 3,271 2,189
------- ------- -------
Total assets .................................... $67,553 $65,636 $60,597
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt ................. $ 813 $ 907 $ 479
Accounts payable .................................. 4,651 5,435 5,902
Accrued liabilities ............................... 8,309 8,191 8,564
Customer advances ................................. 998 545 1,143
------- ------- -------
Total current liabilities ....................... 14,771 15,078 16,088
Long-term debt, less current portion ................. 2,816 4,179 2,539
Deferred income taxes ................................ 815 853 870
Stockholders' equity ................................. 49,151 45,526 41,100
------- ------- -------
Common shares outstanding--
1996: 4,715,976; 1995: 4,734,530; 1994: 4,694,191
Total liabilities and stockholders' equity ...... $67,553 $65,636 $60,597
======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data) For the years ended January 31
1996 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales ............................................. $ 120,444 $ 121,720 $ 121,468
Cost of goods sold .................................... 97,784 97,752 97,894
----------- ----------- -----------
Gross profit ....................................... 22,660 23,968 23,574
----------- ----------- -----------
Operating expenses
Selling ............................................ 7,223 7,075 6,950
Administrative ..................................... 5,876 5,957 6,184
Beta Raven charge .................................. 1,800
----------- ----------- -----------
13,099 14,832 13,134
----------- ----------- -----------
Operating income ................................. 9,561 9,136 10,440
----------- ----------- -----------
Other income (expense)
Interest ........................................... (375) (323) (327)
Equity in earnings of affiliate .................... 225 300 350
Miscellaneous ...................................... 155 259 175
----------- ----------- -----------
5 236 198
----------- ----------- -----------
Income before income taxes ....................... 9,566 9,372 10,638
Income taxes
Currently payable .................................. 3,572 3,313 4,103
Deferred ........................................... (203) (29) (419)
----------- ----------- -----------
3,369 3,284 3,684
----------- ----------- -----------
Net income ....................................... $ 6,197 $ 6,088 $ 6,954
=========== =========== ===========
Net income per common and common-equivalent share ..... $ 1.30 $ 1.27 $ 1.45
=========== =========== ===========
Average common and common-equivalent shares outstanding 4,782,185 4,791,083 4,795,795
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Dollars in thousands) For the years ended January 31
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income .......................................................... $ 6,197 $ 6,088 $ 6,954
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .................................. 4,242 3,582 2,897
Provision for losses on accounts receivable .................... 86 135 180
Deferred income taxes .......................................... (203) (29) (419)
Equity in earnings of affiliate, net of dividends .............. (105) (180) (254)
Change in operating assets and liabilities, net of
effects from acquisition of businesses ...................... (525) (2,110) 1,857
Other .......................................................... (5) (34) 42
-------- -------- --------
Net cash provided by operating activities ........................... 9,687 7,452 11,257
Cash flows from investing activities:
Capital expenditures ................................................ (4,186) (7,753) (5,784)
Acquisition of businesses ........................................... (510) (2,372)
Other ............................................................... 538 125 (124)
-------- -------- --------
Net cash used in investing activities ............................... (4,158) (10,000) (5,908)
Cash flows from financing activities:
Issuance of short-term debt ......................................... 4,500 7,500 5,500
Payment of short-term debt .......................................... (4,500) (7,500) (5,500)
Long-term debt principal payments ................................... (1,457) (804) (2,498)
Proceeds from issuance of long-term debt ............................ 2,872 1,840
Net proceeds from exercise of stock options ......................... 134 181 161
Dividends paid ...................................................... (2,130) (1,843) (1,545)
Purchase of treasury stock .......................................... (576)
-------- -------- --------
Net cash provided by (used in) financing activities ................. (4,029) 406 (2,042)
-------- -------- --------
Net increase (decrease) in cash and equivalents ........................ 1,500 (2,142) 3,307
Cash and cash equivalents at beginning of year ......................... 2,304 4,446 1,139
-------- -------- --------
Cash and cash equivalents at end of year ............................... $ 3,804 $ 2,304 $ 4,446
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 * SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of Raven
Industries, Inc. ("Raven") and its wholly owned subsidiaries (the "company"),
Aerostar International, Inc. ("Aerostar"); Beta Raven Inc. ("Beta"); and
Glasstite, Inc. ("Glasstite"). All material intercompany balances and
transactions have been eliminated in consolidation.
USE OF ESTIMATES:
The preparation of the company's financial statements requires management
to make certain estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and the
reported amounts of revenues and expenses during the reporting periods.
CASH AND CASH EQUIVALENTS:
The company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. Cash and cash
equivalent balances are principally concentrated in a money market mutual fund
with Norwest Funds, an affiliate of Norwest Bank Minnesota, N.A.
INVENTORY VALUATION:
Inventories are stated at the lower of cost or market with cost determined
on the first-in, first-out basis.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost and is depreciated over the
estimated useful life of the asset using accelerated methods. The estimated
useful lives used for computing depreciation are as follows:
Buildings and improvements .. 7 to 39 years
Machinery and equipment ..... 3 to 7 years
Maintenance and repairs are charged to expense in the year incurred and
renewals and betterments are capitalized. The cost and related accumulated
depreciation of assets sold or disposed of are removed from the accounts and the
resulting gain or loss is reflected in income.
INTANGIBLE ASSETS:
Intangible assets are primarily comprised of goodwill and patents which are
recorded at cost net of accumulated amortization. Amortization is computed on a
straight-line basis over estimated useful lives ranging from 5 to 20 years.
INVESTMENT IN AFFILIATE:
Raven has a 50 percent equity interest in a corporation engaged in the
manufacture of injection-molded plastic products. Raven accounts for the
investment using the equity method.
INSURANCE OBLIGATIONS:
The company employs large deductible insurance policies covering workers
compensation, employee health care and general liability costs. Costs are
accrued up to the limits of these policies based on claims filed and estimates
for claims incurred but not reported.
CONTINGENCIES:
The company may from time to time be involved as a defendant in lawsuits,
claims or disputes in the normal course of business. An estimated loss is
charged to income when it is probable that an asset has been impaired or a
liability incurred and the amount of the loss can be reasonably estimated.
Management believes that there are no current claims or disputes which would
result in liability having a material adverse effect on the fiancial position of
the company.
RESEARCH AND DEVELOPMENT:
Research and development expenditures of $619,000 in 1996, $955,000 in
1995, and $781,000 in 1994 were charged to cost of goods sold in the year
incurred.
INCOME TAXES:
Deferred income taxes reflect temporary differences between assets and
liabilities reported on the company's balance sheet and their tax basis. These
differences are measured using enacted tax laws and statutory tax rates
applicable to the periods when the temporary differences will impact taxable
income. Income tax expense is the tax payable for the period and the change
during the period in deferred income taxes.
NET INCOME PER SHARE:
Earnings per share are computed by dividing net income by the weighted
average number of common and common-equivalent shares outstanding. Common shares
outstanding represent common shares issued less shares purchased and held in
treasury. Common-equivalent shares represent shares issuable upon the assumed
exercise of dilutive employee stock options less treasury shares assumed
purchased with the option proceeds.
25
<PAGE>
NOTE 2 * SELECTED BALANCE SHEET INFORMATION
Following are the components of selected balance sheet items:
(Dollars in thousands) January 31
1996 1995 1994
- ----------------------------------------------------------------------------
ACCOUNTS RECEIVABLE:
Trade accounts ....................... $ 16,342 $ 17,942 $ 16,890
Allowance for doubtful accounts ...... (340) (350) (350)
-------- -------- --------
Total ............................ $ 16,002 $ 17,592 $ 16,540
======== ======== ========
INVENTORIES:
Finished goods ....................... $ 5,236 $ 4,247 $ 4,102
In process ........................... 5,605 4,709 5,815
Materials ............................ 13,317 13,147 12,803
-------- -------- --------
24,158 22,103 22,720
Progress payments .................... (261) (496)
-------- -------- --------
Total ............................ $ 23,897 $ 22,103 $ 22,224
======== ======== ========
PROPERTY, PLANT, AND EQUIPMENT:
Land ................................. $ 1,185 $ 1,129 $ 1,038
Building and improvements ............ 13,285 13,253 10,664
Machinery and equipment .............. 30,550 28,726 24,077
-------- -------- --------
45,020 43,108 35,779
Accumulated depreciation ............... (26,951) (24,538) (22,408)
-------- -------- --------
Total ............................ $ 18,069 $ 18,570 $13,371
======== ======== =======
OTHER ASSETS:
Investment in affiliate .............. $ 1,796 $ 1,691 $ 1,511
Intangible assets, net of amortization 1,746 1,474 567
Miscellaneous ........................ 247 106 111
-------- -------- --------
Total ............................ $ 3,789 $ 3,271 $ 2,189
======== ======== ========
ACCRUED LIABILITIES:
Profit sharing ....................... $ 1,324 $ 1,557 $ 1,933
Vacations ............................ 1,622 1,573 1,502
Salaries and wages ................... 2,427 2,121 2,167
Insurance obligations ................ 1,502 1,405 1,558
Other ................................ 1,434 1,535 1,404
-------- -------- --------
Total ............................ $ 8,309 $ 8,191 $ 8,564
======== ======== ========
26
<PAGE>
NOTE 3 * SUPPLEMENTAL CASH FLOW INFORMATION
(Dollars in thousands) For the years ended January 31
1996 1995 1994
- -----------------------------------------------------------------------------
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable ........................ $ 1,504 $(1,187) $ (549)
Inventories ................................ (1,785) 497 1,652
Prepaid expenses and other current assets .. (31) 42 (54)
Accounts payable ........................... (784) (467) (1,253)
Accrued liabilities ........................ 118 (397) 1,755
Customer advances .......................... 453 (598) 306
------- ------- -------
$ (525) $(2,110) $ 1,857
======= ======= =======
CASH PAID DURING THE YEAR FOR:
Interest ................................... $ 395 $ 318 $ 292
Income taxes ............................... 3,761 2,733 4,146
NOTE 4 * BETA RAVEN CHARGE
During the quarter ended July 31, 1994, the Company recorded a charge of
$1.8 million related to its Beta Raven Inc. subsidiary. The charge related
principally to a reorganization of the subsidiary's bakery equipment
installation business and to provide for direct management of the subsidiary's
operations by Raven's corporate officers and management. Products with high
technological risk were de-emphasized or abandoned. The charge consisted
primarily of a $1.2 million write-down of development costs and inventories and
the accrual of $.6 million related to cost overruns on bakery installations and
employee severance costs.
NOTE 5 * ACQUISITIONS
During fiscal 1996 and fiscal 1995, the company acquired certain assets of
several different companies for $510,000 and $2.4 million, respectively. The
aquisitions were accounted for as purchases. The cost in excess of net tangible
assets acquired resulted in goodwill of $1.4 million. The consolidated financial
statements include the results of operations of these businesses subsequent to
the acquisition dates. Pro forma information related to the acquisitions has not
been presented due to immateriality.
NOTE 6 * BUSINESS SEGMENTS AND MAJOR CUSTOMER INFORMATION
The company operates in three reportable business segments consisting of
Electronics, Plastics and Sewn Products. Segment information can be found of
page 12, along with a description of product lines included in each segment.
Sewn Products segment sales to a catalog merchandiser were $14.5 million in
fiscal 1995. Direct sales on prime contracts with United States Government
agencies were $18.2 million in fiscal 1994, principally from the Electronics and
Sewn Products business segments. No other customer accounted for more than 10%
of consolidated sales in any fiscal year presented.
27
<PAGE>
NOTE 7 * QUARTERLY DATA (UNAUDITED)
Quarterly net sales, gross profit, net income and net income per share data
are presented on page 21.
NOTE 8 * FINANCING ARRANGEMENTS
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
(Dollars in thousands) January 31
1996 1995 1994
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Norwest bank notes payable in installments through 1999
with interest at the prime rate ...................... $ 2,680 $ 3,540 $ 1,300
Contracts, notes and mortgages payable in installments
through 2003 with interest from 3.0% to 9.0% ......... 740 1,293 1,421
Industrial revenue bonds payable in installments through
2001 with interest at 83% of the prime rate .......... 209 253 297
------- ------- -------
Total long-term debt ............................. 3,629 5,086 3,018
Current portion .................................. (813) (907) (479)
------- ------- -------
$ 2,816 $ 4,179 $ 2,539
======= ======= =======
</TABLE>
Certain long-term debt is collateralized by land, buildings and equipment
having an aggregate depreciated cost at January 31, 1996 of $1.9 million.
Norwest Bank South Dakota, N.A. (Norwest) provides the company's unsecured notes
and unsecured line of credit. Two members of the company's board of directors
are also on the board of directors of Norwest.
The aggregate amounts of long-term debt maturing during the years
subsequent to January 31, 1996 are as follows:
Year ending January 31:
(Dollars in thousands)
- ----------------------------------------------------------
1997 ........................................ $ 813
1998 ........................................ 1,170
1999 ........................................ 1,524
2000 ........................................ 54
2001 ........................................ 44
Thereafter .................................. 24
-------
Total ................................. $ 3,629
=======
The company had a $6.0 million unsecured line of credit available as of
January 31, 1996; no borrowings were outstanding as of that date. Borrowings on
the line bear interest at rates approximating the prime rate. The prime rates at
January 31, 1996, 1995, and 1994 were 8.5%, 8.5%, and 6.0%, respectively. The
weighted average interest rates under short-term credit lines in fiscal 1996,
1995, and 1994 were 8.9%, 7.6%, and 6.0%, respectively.
28
<PAGE>
NOTE 9 * STOCKHOLDERS' EQUITY
Following is an analysis of changes in stockholders' equity:
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
$1 par Treasury
common Paid-in stock, Retained
stock capital at cost earnings Total
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, January 31, 1993 ........ $ 4,992 $ 136 $(2,334) $32,736 $35,530
Net income ....................... 6,954 6,954
Cash dividend ($.33 per share) ... (1,545) (1,545)
Purchase and retirement of stock . (5) (94) (99)
Employees' stock options exercised 23 237 260
----------------------------------------------------
Balance, January 31, 1994 ........ 5,010 279 (2,334) 38,145 41,100
Net income ....................... 6,088 6,088
Cash dividend ($.39 per share) ... (1,843) (1,843)
Purchase and retirement of stock . (35) (730) (765)
Employees' stock options exercised 75 871 946
----------------------------------------------------
Balance, January 31, 1995 ........ 5,050 420 (2,334) 42,390 45,526
Net income ....................... 6,197 6,197
Cash dividend ($.45 per share) ... (2,130) (2,130)
Purchase of treasury stock ....... (576) (576)
Purchase and retirement of stock . (9) (172) (181)
Employees' stock options exercised 27 288 315
----------------------------------------------------
BALANCE, JANUARY 31, 1996 ........ $ 5,068 $ 536 $(2,910) $46,457 $49,151
====================================================
</TABLE>
The company is authorized to issue up to 100,000,000 shares of its $1 par
value common stock. Other information on common shares:
At January 31
1996 1995 1994
- ----------------------------------------------------
Issued ......... 5,068,379 5,050,433 5,010,094
Outstanding .... 4,715,976 4,734,530 4,694,191
Held in treasury 352,403 315,903 315,903
RIGHTS PLAN:
The company has a Share Purchase Rights Plan designed to protect the
interests of its stockholders by preventing a potential acquiror from gaining
control of the company without offering a fair price to all stockholders. Under
the Plan, each stockholder has one Right for each share of the company's common
stock owned. Each Right entitles the stockholder to purchase from the company
one share of the company's common stock for a specified price. The Rights are
not exercisable or transferable apart from the common stock until ten days after
a person or group has acquired 20 percent or more, or makes a tender offer for
30 percent or more, of the company's outstanding common stock. The Rights expire
in March 1999 and are redeemable by the company at $.01 per Right prior to the
date upon which they become exercisable, and in certain limited circumstances
following such date.
29
<PAGE>
NOTE 10 * STOCK OPTIONS
Officers and key employees of the company have been granted options to
purchase stock under the 1990 Stock Option Plan. Options are granted at prices
not less than market value at date of grant. The plan, administered by the Board
of Directors, allows for a cash bonus when options are exercised and may grant
either incentive stock options or non-qualified options with terms not to exceed
ten years. Option transactions are summarized as follows:
Available Options Options Price
for grant outstanding exercisable per share
- ------------------------------------------------------------------------------
Balance, January 31, 1993 .. 119,900 235,600 90,113 $ 5.42-13.87
Granted .................. (58,200) 58,200 20.00
Becoming exercisable ..... 57,311 6.83-13.87
Exercised ................ (22,180) (22,180) 5.42-11.83
Forfeited ................ (1,540) 6.83-13.87
----------------------------------------------
Balance, January 31, 1994 .. 61,700 270,080 125,244 6.83-20.00
Reserved by plan amendment 300,000
Granted .................. (59,400) 59,400 18.25
Becoming exercisable ..... 54,979 6.83-20.00
Exercised ................ (74,812) (74,812) 6.83-13.87
Forfeited ................ (7,087) 6.83-20.00
----------------------------------------------
Balance, January 31, 1995 .. 302,300 247,581 105,411 6.83-20.00
Granted .................. (60,000) 60,000 17.87
Becoming exercisable ..... 56,207 11.83-20.00
Exercised ................ (27,289) (27,289) 6.83-13.87
----------------------------------------------
BALANCE, JANUARY 31, 1996 .. 242,300 280,292 134,329 $11.83-20.00
==============================================
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, a new standard of accounting and
reporting for stock-based compensation plans. The company is not required to
adopt the new standard until fiscal 1997. The company expects to continue to
measure compensation cost for its stock option plans using the intrinsic value
based method of accounting it has historically used and, therefore, the new
standard will have no effect on the company's operating results. The company's
financial statement disclosures will be expanded in fiscal 1997, as required, to
include pro forma disclosures as if the fair value based method of accounting
had been followed.
NOTE 11 * EMPLOYEE RETIREMENT PLAN
The company has a profit sharing plan covering substantially all employees.
Contributions to the plan, not to exceed 15% of total eligible compensation, are
made separately by Raven and each subsidiary, at the discretion of each entity's
Board of Directors. The company's contribution to the plan was $1,324,000,
$1,557,000, and $1,933,000 for the years ended January 31, 1996, 1995 and 1994,
respectively.
30
<PAGE>
NOTE 12 * INCOME TAXES
Significant components of the company's deferred tax assets and liabilities
are as follows:
(Dollars in thousands) January 31
1996 1995 1994
- ------------------------------------------------------------
DEFERRED TAX ASSETS:
Allowance for doubtful accounts $ 119 $ 122 $ 122
Inventory valuation methods ... 107 99 80
Accrued vacations ............. 429 416 398
Insurance obligations ......... 491 441 508
Other accrued liabilities ..... 433 336 294
------------------------
Total ..................... 1,579 1,414 1,402
------------------------
DEFERRED TAX LIABILITIES:
Carrying value of investment .. 622 588 525
Depreciation methods .......... 83 90 113
Safe-harbor leases ............ 110 175 232
------------------------
Total ..................... 815 853 870
------------------------
Net deferred tax asset .......... $ 764 $ 561 $ 532
========================
The company's effective tax rate was 35.2%, 35.0%, and 34.6% in 1996, 1995,
and 1994, respectively. The tax rate varies from the statutory rate of 35% due
primarily to the effect of state income taxes and non-deductible expenses offset
by the impact of graduated income tax rates.
31
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS
AND STOCKHOLDERS OF RAVEN INDUSTRIES, INC.:
We have audited the accompanying consolidated balance sheets of Raven
Industries, Inc. and subsidiaries as of January 31, 1996, 1995, and 1994, and
the related consolidated statements of income and cash flows for each of the
three years in the period ended January 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Raven
Industries, Inc. and subsidiaries as of January 31, 1996, 1995, and 1994 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 31, 1996, in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Minneapolis, Minnesota
March 7, 1996
32
<PAGE>
RAVEN INDUSTRIES
DIRECTORS
CONRAD J. HOIGAARD(2)(3)
Chairman of the Board
Raven Industries, Inc.
Chairman of the Board
Hoigaard's Inc.
Minneapolis, MN
DAVID A. CHRISTENSEN(3)
President & Chief Executive Officer
Raven Industries, Inc.
Sioux Falls, SD
ANTHONY W. BOUR(1)
President
Starmark, Inc.
Sioux Falls, SD
MARK E. GRIFFIN(2)
President & Chief Executive Officer
Lewis Drugs, Inc.
Sioux Falls, SD
KEVIN T. KIRBY(1)
President
Kirby Investment Corp.
Sioux Falls, SD
JOHN C. SKOGLUND(2)(3)
Chairman
Skoglund Communications
Duluth, MN
Chairman
Minnesota Vikings
Minneapolis, MN
(1) Audit Committee
(2) Compensation Committee
(3) Executive Committee
STOCK TRANSFER AGENT AND REGISTRAR
Norwest Bank
Minnesota, N.A.
161 N. Concord Exchange
P. O. Box 738
S. St. Paul, MN 55075-0738
Norwest Trust Company
New York, NY
OFFICERS
DAVID A. CHRISTENSEN
President & Chief Executive Officer
Service--33 years
GARY L. CONRADI
Vice President
Corporate Services
Service--29 years
RONALD M. MOQUIST
Executive Vice President
Service--20 years
ARNOLD J. THUE
Vice President, Finance
Secretary & Treasurer
Service--28 years
FORM 10-K
Upon written request, Raven Industries, Inc.'s Form 10-K for the fiscal year
ended January 31, 1996, which has been filed with the Securities and Exchange
Commission, is available free of charge.
DIRECT INQUIRIES TO:
Raven Industries, Inc.
Attention: Vice President, Finance
Box 5107
Sioux Falls, SD 57117-5107
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Minneapolis, MN
STOCK QUOTATIONS
Nasdaq Ticker Symbol--RAVN
ANNUAL MEETING
May 22, 1996
9:00 a.m.
Ramkota Inn
Hwy. 38 & I-29
Sioux Falls, SD
Raven Industries, Inc. is an Equal Employment Opportunity Employer with an
approved affirmative action plan.
Report designed by Graphic Concepts, Unlimited, Okemos, MI
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Name of Subsidiary State of Incorporation
------------------ ----------------------
Aerostar International, Inc. South Dakota
Astoria Industries, Inc. South Dakota
Beta Raven Inc. Missouri
Glasstite, Inc. Minnesota
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 of Raven Industries, Inc. (Registration No. 33-38614) of
our report dated March 7, 1996, on our audits of the consolidated financial
statements of Raven Industries, Inc. as of January 31, 1996, 1995 and 1994, and
for each of the three years in the period ended January 31, 1996 included on
page 32 of the Annual Report to Shareholders and our report on the related
financial statement schedule included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Minneapolis, Minnesota
April 17, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 3,804
<SECURITIES> 0
<RECEIVABLES> 16,342
<ALLOWANCES> 340
<INVENTORY> 23,897
<CURRENT-ASSETS> 45,695
<PP&E> 45,020
<DEPRECIATION> 26,951
<TOTAL-ASSETS> 67,553
<CURRENT-LIABILITIES> 14,771
<BONDS> 2,816
0
0
<COMMON> 5,068
<OTHER-SE> 44,083
<TOTAL-LIABILITY-AND-EQUITY> 67,553
<SALES> 120,444
<TOTAL-REVENUES> 120,444
<CGS> 97,784
<TOTAL-COSTS> 97,784
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 375
<INCOME-PRETAX> 9,566
<INCOME-TAX> 3,369
<INCOME-CONTINUING> 6,197
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,197
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 1.30
</TABLE>
