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: APRIL 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________________________
Commission file number: 0-3136
RAVEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 46-0246171
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
205 EAST 6TH STREET
P.O. BOX 5107
SIOUX FALLS, SD 57117-5107
(Address of principal executive offices) (Zip code)
605-336-2750
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF APRIL 30, 1997
- ----- --------------------------------
Common Stock 4,837,550 shares
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I-FINANCIAL INFORMATION
Consolidated Balance Sheets as of April 30, 1997,
January 31, 1997 and April 30, 1996 3
Consolidated Statements of Income for the three months
ended April 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for the
three months ended April 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Computation 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
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
4/30/97 01/31/97 4/30/96
------- ------- -------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents ................................... $ 2,055 $ 3,439 $ 1,789
Accounts receivable, less allowance for
doubtful accounts of $342, $340 and $340 .................. 23,001 25,637 18,556
Inventories:
Materials ................................................. 17,696 16,276 14,494
In process ................................................ 4,783 4,574 5,286
Finished goods ............................................ 5,864 4,275 5,829
------- ------- -------
Total inventories ..................................... 28,343 25,125 25,609
Prepaid expenses and other current assets ................... 328 431 333
Deferred income taxes ....................................... 2,064 2,064 1,579
------- ------- -------
Total current assets .................................. 55,791 56,696 47,866
------- ------- -------
Property, plant and equipment ............................... 49,588 48,315 46,188
Less: accumulated depreciation ............................ 31,183 30,173 27,934
------- ------- -------
Net property, plant and equipment ..................... 18,405 18,142 18,254
Other assets, net ........................................... 5,852 5,824 3,752
------- ------- -------
TOTAL ASSETS ................................................ $80,048 $80,662 $69,872
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt ........................... $ 1,766 $ 1,366 $ 813
Accounts payable ............................................ 6,526 7,849 5,911
Accrued liabilities and customer advances ................... 10,125 10,801 9,189
------- ------- -------
Total current liabilities ............................. 18,417 20,016 15,913
Long-term debt, less current portion ........................ 2,639 3,181 2,746
Deferred income taxes ....................................... 736 736 815
Stockholders' equity
Common stock, $1 par value, authorized shares: 100,000,000;
issued: 5,189,953; 5,187,961 and 5,068,905 shares ........ 5,190 5,188 5,069
Paid in capital ........................................... 2,693 2,673 540
Retained earnings ......................................... 53,283 51,778 47,699
------- ------- -------
61,166 59,639 53,308
Less treasury stock, at cost:
352,403 shares ........................................ 2,910 2,910 2,910
------- ------- -------
Total stockholders' equity ............................ 58,256 56,729 50,398
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................. $80,048 $80,662 $69,872
======= ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands except per-share data)
FOR THE THREE
MONTHS ENDED:
--------------------------
4/30/97 4/30/96
----------- -----------
Net sales ................... $ 35,666 $ 30,875
Cost of goods sold .......... 28,839 24,789
----------- -----------
Gross profit .............. 6,827 6,086
----------- -----------
Operating expenses
Selling ................... 1,936 1,754
Administrative ............ 1,603 1,506
----------- -----------
Operating income ....... 3,288 2,826
----------- -----------
Interest expense ............ (88) (69)
Other income, net ........... 134 40
----------- -----------
Income before income taxes 3,334 2,797
Income taxes ................ 1,200 989
----------- -----------
Net income ................ $ 2,134 $ 1,808
=========== ===========
Average number of common and
common-equivalent shares
outstanding ............... 4,865,520 4,744,685
=========== ===========
Net income per common and
common-equivalent share ... $ 0.44 $ 0.38
=========== ===========
Cash dividends paid per share $ 0.130 $ 0.120
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
FOR THE THREE
MONTHS ENDED:
------------------
4/30/97 4/30/96
------- -------
Cash flows from operating activities:
Net income .......................................... $ 2,134 $ 1,808
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ................... 1,325 1,182
Provision for losses on accounts receivable ..... 34 36
Equity in earnings of affiliate, net of dividends (100) 0
(Increase) decrease in accounts receivable ...... 2,602 (2,590)
(Increase) decrease in inventories .............. (3,218) (1,712)
(Increase) decrease in other current assets ..... 103 80
Increase (decrease) in operating liabilities .... (1,999) 1,142
Other ........................................... 25 (3)
------- -------
Net cash provided by (used in) operating activities . 906 (57)
Cash flows from investing activities:
Capital expenditures ................................ (1,539) (1,322)
Intangible asset expenditures and other ............. (2) (5)
------- -------
Net cash provided by (used in) investing activities . (1,541) (1,327)
Cash flows from financing activities:
Long-term debt principal payments ................... (142) (70)
Proceeds from exercise of stock options ............. 22 5
Dividends paid ...................................... (629) (566)
------- -------
Net cash provided by (used in) financing activities . (749) (631)
------- -------
Net increase (decrease) in cash and equivalents ..... (1,384) (2,015)
Cash and cash equivalents at beginning of period ...... 3,439 3,804
------- -------
Cash and cash equivalents at end of period ............ $ 2,055 $ 1,789
======= =======
Cash paid during the period for:
Interest .......................................... $ 95 $ 74
Income taxes ...................................... $ 320 $ 35
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. 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 of the Securities and Exchange
Commission (SEC). 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 period ended April 30, 1997 are
not necessarily indicative of the results that may be expected for the
year ending January 31, 1998. 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,
1997.
2. In March 1997, the Financial Accounting Standards Board issued
Statement No. 128 "Earnings per Share," which the Company will adopt
effective for its fiscal 1998 year end reporting. The Company will be
required to report basic net income per share based on weighted average
common shares outstanding, without considering common equivalent
shares, and diluted net income per share based on weighted average
common and common equivalent shares outstanding. Diluted net income per
share would be equivalent to the Company's current reporting of net
income per common and common-equivalent share.
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS PER COMMON SHARE (UNAUDITED)
(Dollars in thousands except per-share data)
FOR THE THREE
MONTHS ENDED:
-----------------------
4/30/97 4/30/96
---------- ----------
Net income ........................................... $ 2,134 $ 1,808
========== ==========
Earnings per common share
- Primary ........................................ $ 0.44 $ 0.38
========== ==========
Earnings per common share
- Fully diluted (1) .............................. $ 0.44 $ 0.38
========== ==========
Average number of common and common equivalent shares:
Primary:
Weighted average common
shares outstanding .............................. 4,836,975 4,716,185
Dilutive effect of exercise
of certain stock options ........................ 28,545 28,500
---------- ----------
Average common shares
- Primary ....................................... 4,865,520 4,744,685
========== ==========
Fully diluted (1):
Weighted average common
shares outstanding .............................. 4,836,975 4,716,185
Dilutive effect of exercise
of certain stock options ........................ 28,545 28,500
---------- ----------
Average common shares
- Fully diluted ................................. 4,865,520 4,744,685
========== ==========
(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%.
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The company's cash balance was $2.1 million at April 30, 1997 and was $266,000
higher than one year earlier. For the first three months of the current fiscal
year the company's cash flow from operations was $906,000; a $963,000
improvement over the comparable period in the prior year. Higher earnings and
collection of year-end accounts receivable balances accounted for much of the
improvement. Accounts receivable balances at April 30, 1997 were $4.4 million
higher than one year earlier due primarily to the higher sales level. The
company's capital resources continue to be sufficient to fund all operating and
investing activities.
RESULTS OF OPERATIONS
First quarter records were set for sales and net income during the quarter ended
April 30, 1997. Sales increased by 16 percent over the previous record set one
year earlier and totaled $35.7 million. Net income of $2.1 million was 18
percent higher than the comparable period of the prior year. Earnings per share
of $.44 increased 16 percent. The number of average shares outstanding increased
by 121,000 due primarily to the issuance of shares in connection with the
purchase of Norcore Plastics, Inc. in January 1997. Sales and operating income
increased in every business segment.
Electronics segment sales of $12.2 million in the first quarter were up one
percent over the first quarter of the prior year. Sales of flow control devices
for precision farming increased slightly, but were nearly $1 million below
management expectations as new product introductions did not result in
additional sales. Feedmill automation and contract manufacturing revenues were
relatively flat. First quarter Electronics segment operating income of $2.0
million was 13 percent higher than the comparable period of the prior year.
Operating income for the quarter ended April 30, 1996 was reduced by start-up
costs related to product introductions and new contract manufacturing customers.
Plastics segment sales were $17.9 million in the quarter ended April 30, 1997,
compared to $14.0 million one year earlier. The acquisition of Norcore Plastics,
Inc. in January 1997 contributed $2.7 million to revenues. Sales of plastic
tanks, flexible films and pickup-truck toppers all increased. Operating income
in this segment was $987,000 in the first quarter, a one percent increase over
the prior year's first quarter. The impact of higher sales was substantially
offset by business integration costs and production inefficiencies, resulting in
a lower gross profit rate.
Sewn Products segment sales of $5.6 million in the first quarter were at their
seasonal low point and were 14 percent higher than the comparable period of the
prior year. The higher sales and production efficiencies raised operating income
from $85,000 last year in the first quarter to $306,000 this year.
Consolidated gross profits increased by 12 percent over the first quarter of the
prior year. Gross profit rate increases in the Electronics and Sewn Products
segments were offset by a decline in the Plastics segment. The first quarter
consolidated gross profit rate was 19.7 percent last year and 19.1 percent this
year. Selling and administrative expenses declined from 10.6 percent of sales to
9.9 percent. The profit impact of higher sales increased first quarter operating
and net income by 16 and 18 percent, respectively, when compared to the first
quarter of 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 SEC 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: JUNE 9, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-30-1997
<CASH> 2,055
<SECURITIES> 0
<RECEIVABLES> 23,343
<ALLOWANCES> 342
<INVENTORY> 28,343
<CURRENT-ASSETS> 55,791
<PP&E> 49,588
<DEPRECIATION> 31,183
<TOTAL-ASSETS> 80,048
<CURRENT-LIABILITIES> 18,417
<BONDS> 2,639
0
0
<COMMON> 5,190
<OTHER-SE> 53,066
<TOTAL-LIABILITY-AND-EQUITY> 80,048
<SALES> 35,666
<TOTAL-REVENUES> 35,666
<CGS> 28,839
<TOTAL-COSTS> 28,839
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> 3,334
<INCOME-TAX> 1,200
<INCOME-CONTINUING> 2,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,134
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.44
</TABLE>
