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, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________________
Commission file number: 0-3136
RAVEN INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 46-0246171
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(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
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(Address of principal executive offices) (Zip code)
605-336-2750
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ___X___ No _______
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF MAY 31, 2000
--------------------------- ------------------------------------------
Common Stock 3,563,407 shares
<PAGE>
RAVEN INDUSTRIES, INC.
INDEX
PAGE NO.
--------
PART I-FINANCIAL INFORMATION
Consolidated Balance Sheet as of April 30, 2000,
January 31, 2000 and April 30, 1999 3
Consolidated Statement of Income for the three months
ended April 30, 2000 and 1999 4
Consolidated Statement of Cash Flows for the
three months ended April 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II-OTHER INFORMATION 10
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
Dollars in thousands, except per share data
<TABLE>
<CAPTION>
04/30/00 01/31/00 04/30/99
-------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
------
Cash and cash equivalents ........................................ $ 1,866 $ 5,707 $ 2,055
Accounts and note receivable, less allowance for
doubtful accounts of $461,000, $400,000 and $401,000 as of
04/30/00, 01/31/00 and 04/30/99, respectively .................. 22,687 22,717 24,272
Inventories, net:
Materials ...................................................... 17,417 16,260 20,419
In process ..................................................... 6,232 4,997 5,204
Finished goods ................................................. 3,538 3,205 6,010
-------- -------- --------
Total inventories, net ..................................... 27,187 24,462 31,633
Deferred income taxes ............................................ 2,010 1,919 1,132
Prepaid expenses and other current assets ........................ 536 566 269
-------- -------- --------
Total current assets ....................................... 54,286 55,371 59,361
Property, plant and equipment .................................... 49,552 48,949 58,058
Less accumulated depreciation .................................. 34,893 33,881 39,007
-------- -------- --------
Property, plant and equipment, net ......................... 14,659 15,068 19,051
Other assets, net ................................................ 3,592 3,608 3,734
-------- -------- --------
Total assets ..................................................... $ 72,537 $ 74,047 $ 82,146
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current portion of long-term debt ................................ $ 33 $ 1,044 $ 608
Accounts payable ................................................. 5,969 5,320 5,418
Accrued liabilities and customer advances ........................ 8,941 8,338 8,792
-------- -------- --------
Total current liabilities .................................. 14,943 14,702 14,818
Long-term debt, less current portion ............................. 3,012 3,024 3,992
Other liabilities, primarily compensation and benefits ........... 1,987 1,802 1,775
Commitments and contingencies
Stockholders' equity
Common stock, $1.00 par value, authorized shares:
100,000,000 issued: 5,218,114; 5,218,114 and 5,215,489
as of 04/30/00, 01/31/00 and 04/30/99, respectively ........... 5,218 5,218 5,215
Paid-in capital ................................................ 3,177 3,177 2,961
Retained earnings .............................................. 65,259 64,236 61,060
-------- -------- --------
73,654 72,631 69,236
Less treasury stock, at cost
1,522,707; 1,302,007 and 623,203 shares as of 04/30/00,
01/31/00 and 04/30/99, respectively ........................ 21,059 18,112 7,675
-------- -------- --------
Total stockholders' equity ................................. 52,595 54,519 61,561
-------- -------- --------
Total liabilities and stockholders' equity ....................... $ 72,537 $ 74,047 $ 82,146
======== ======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 3
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Dollars in thousands, except per share data
FOR THE THREE
MONTHS ENDED:
-----------------------
04/30/00 04/30/99
--------- ---------
Net sales ...................................... $ 31,544 $ 34,495
Cost of goods sold ............................. 25,277 28,484
--------- ---------
Gross profit ................................. 6,267 6,011
Operating expenses
Selling ...................................... 1,774 1,972
Administrative ............................... 1,894 1,781
--------- ---------
Operating income .......................... 2,599 2,258
Interest expense ............................... (57) (103)
Other income, net .............................. 79 97
--------- ---------
Income before income taxes ................... 2,621 2,252
Income taxes ................................... 944 813
--------- ---------
Net income ................................... $ 1,677 $ 1,439
========= =========
Net income per common share:
Basic ................................. $ 0.44 $ 0.31
Diluted ............................... $ 0.44 $ 0.31
Cash dividends declared and paid per share ..... $ 0.17 $ 0.16
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 4
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
FOR THE THREE
MONTHS ENDED:
---------------------
04/30/00 04/30/99
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income ................................................. $ 1,677 $ 1,439
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization .......................... 1,098 1,380
Provision for losses on accounts receivable ............ 139 2
Deferred income taxes .................................. (161) 4
Change in accounts and interest receivable ............. (266) 3,125
Change in inventories .................................. (2,725) (5,655)
Change in prepaid expenses and other current assets .... 30 148
Change in operating liabilities ........................ 1,503 273
Other .................................................. (17)
-------- --------
Net cash provided by operating activities .................. 1,295 699
Cash flows from investing activities
Capital expenditures ....................................... (603) (782)
Proceeds from the sale of Glasstite assets ................. 157
Other ...................................................... (66) 27
-------- --------
Net cash used in investing activities ...................... (512) (755)
Cash flows from financing activities
Long-term debt principal payments .......................... (1,023) (1,032)
Dividends paid ............................................. (654) (748)
Purchase of treasury stock ................................. (2,947) (1,444)
-------- --------
Net cash used in financing activities ...................... (4,624) (3,224)
-------- --------
Net decrease in cash and cash equivalents .................. (3,841) (3,280)
Cash and cash equivalents at beginning of period ............. 5,707 5,335
-------- --------
Cash and cash equivalents at end of period ................... $ 1,866 $ 2,055
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 5
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared by Raven Industries, Inc. (the company) in accordance with
accounting principles generally accepted in the United States for interim
financial information and 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 notes required
by accounting principles generally accepted in the United States for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Financial results for
the three-month period ended April 30, 2000 are not necessarily indicative
of results that may be expected for the year ending January 31, 2001. The
January 31, 2000 consolidated balance sheet was derived from audited
financial statements, but does not include all consolidated disclosure
required by accounting principles generally accepted in the United States.
These financial statements should be read in conjunction with the
consolidated financial statements and notes included in the company's
annual report on Form 10-K for the year ended January 31, 2000.
2. Certain reclassifications have been made to the April 30, 1999 balance
sheet to conform to the current year presentation. These reclassifications
had no impact on stockholders' equity or the company's results of
operations.
3. 269,800 and 242,100 options were excluded from diluted earnings per share
calculation on April 30, 1999 and April 30, 2000, respectively, because
their excercise prices were greater than the average market price of the
company's common stock during the period. Details of the earnings per share
computation are presented below (dollars in thousands, except per share
data).
FOR THE THREE
MONTHS ENDED:
------------------------
04/30/00 04/30/99
---------- ----------
Net income ............................... $ 1,677 $ 1,439
========== ==========
Weighted average common shares
outstanding ............................ 3,823,361 4,652,019
Dilutive impact of stock options ......... 0 0
---------- ----------
Weighted average common and common
equivalent shares outstanding .......... 3,823,361 4,652,019
========== ==========
Net income per share
Basic ................................ $ 0.44 $ 0.31
========== ==========
Diluted .............................. $ 0.44 $ 0.31
========== ==========
Page 6
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. The company's three reportable segments (Electronics, Plastics and Sewn
Products) are defined by their common technologies, raw materials, and
production processes. These segments are consistent with the company's
management reporting structure. The company's customers (distributors or
original equipment manufacturers) provide opportunities for each segment to
serve various markets. Distribution methods are similar across and within
segments. These segments' results are shown below.
FOR THE THREE
MONTHS ENDED:
-----------------------
04/30/00 04/30/99
--------- ---------
NET SALES
---------
Electronics ................. $ 14,121 $ 12,917
Plastics .................... 13,965 18,610
Sewn Products ............... 3,458 2,968
--------- ---------
Total company ................. $ 31,544 $ 34,495
========= =========
OPERATING INCOME
----------------
Electronics ................. $ 1,457 $ 866
Plastics .................... 1,325 1,575
Sewn Products ............... (183) (183)
--------- ---------
Total company ................. $ 2,599 $ 2,258
========= =========
5. During the first quarter of fiscal 2001, the company repaid $1.0 million of
its debt originally due in June 2000.
Page 7
<PAGE>
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The company's cash and cash equivalents balance of $1.9 million at April 30,
2000 was $3.8 million less than January 31, 2000, and $189,000 lower than April
30, 1999. There were no borrowings against the company's line of credit as of
April 30, 2000, which was the same as January 31, 2000 and April 30, 1999. The
cash balance as of January 31, 2000 was sufficient to fund the seasonal
increases in inventory levels and prepay $1.0 million of long-term debt due in
June 2000. Inventory levels declined $4.4 million from April 30, 1999 to April
30, 2000, due primarily to the sale of the assets of our Glasstite subsidiary in
fiscal 2000. From April 30, 1999 through April 30, 2000, the company repurchased
899,504 shares of its common stock for a total of $13.4 million, including $2.9
million in the quarter ended April 30, 2000. The company had $3.0 million in
long-term debt at April 30, 2000, including the current portion, down from $4.6
million at April 30, 1999. The company's capital resources continue to be
sufficient to fund all its activities.
RESULTS OF OPERATIONS
Sales for the quarter ended April 30, 2000, were $31.5 million, down $3.0
million from the previous year's results, due primarily to the sale of our
Glasstite subsidiary in fiscal 2000. Glasstite sales for the first quarter last
year totaled $5.7 million. After adjusting last fiscal year's first quarter
results for the Glasstite sale, sales increased $2.7 million this quarter. Most
of this sales increase was generated in our Electronics and Plastics segments.
Net income for the first quarter was $1.7 million, $238,000 superior to last
year's first quarter. Last year's results included Glasstite's contribution of
$381,000 to operating income. The number of shares outstanding for the first
quarter ended April 30, 2000, compared to the first quarter April 30, 1999, was
down 899,504 shares due to the company's on-going repurchase of stock. Earnings
per diluted share climbed to a first quarter record-tying $0.44 from $0.31 in
the first quarter of the previous year.
Electronics segment sales of $14.1 million in the first quarter were 9 percent
higher than one year earlier. Sales of flow control devices increased by more
than $1.0 million in the first quarter, due primarily to increased product
recognition in the marketplace and aggressive marketing. Management remains
cautious about the sustainability of this demand in what continues to be a weak
agricultural marketplace. Sales of feedmill automation systems were down 13
percent, due to the continuing poor ag economy. Contract electronics showed
excellent gains during the first quarter, logging a 9 percent increase in sales
over last year's total, due primarily to heavy deliveries of a long-term
contract relating to the computer industry. First quarter operating income for
the Electronics segment was $1.5 million, up 68 percent from last year's
$866,000. This increase is due to improved sales of higher-margin products along
with higher sales volumes, which allow for improved factory utilization and
labor efficiencies.
Page 8
<PAGE>
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Plastics segment sales of $14.0 million in the quarter ended April 30, 2000
compared to $18.6 million last year, and $12.9 million after adjusting for
Glasstite's first quarter 1999 sales, or an increase in Plastic segment sales of
$1.1 million. All of this increase was generated in our engineered films product
line, due to increased market share. Sales of plastic tanks were down slightly,
due primarily to continuing weak agricultural demand. Operating income for the
segment in fiscal 2001 was $1.3 million, down 16 percent from last year's $1.6
million, which included Glasstite's contribution to $381,000 of operating income
in the first quarter of last year.
Sewn Products segment sales are typically at a seasonal low in the first quarter
of the fiscal year. First quarter sales of $3.5 million were up $490,000 over
last year's $3.0 million. The sales increase was due to off-season contracts
obtained to provide work for our factories. The operating loss for the segment
was unchanged from last year at $183,000. This loss is the result of the less
profitable off-season business. Management does not expect first quarter results
to be representative of the full year. Although full-year sales are expected to
decline from last year's $28 million for this segment, management expects the
segment will generate an operating profit during that timeframe.
Consolidated gross profits of $6.3 million in the first quarter were 4 percent
higher than the prior year's first quarter, due primarily to the strong
performance of the Electronics segment. Selling expenses were 10 percent lower
than the prior year because of the sale of our Glasstite subsidiary operation
and of the company's proprietary skiwear product line, which had higher selling
expenses than other businesses of the company. Administrative expenses were 6
percent higher than the previous year reflecting increased bad debt and benefits
expenses. Pretax income of $2.6 million was 16 percent greater than the first
quarter of the prior fiscal year.
FORWARD-LOOKING STATEMENTS
THIS REPORT CONTAINS DISCUSSIONS OF ITEMS WHICH MAY CONSTITUTE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF FEDERAL SECURITIES LAWS. ALTHOUGH RAVEN
INDUSTRIES BELIEVES THAT EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, IT CAN GIVE NO ASSURANCES THAT
ITS EXPECTATIONS WILL BE ACHIEVED. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER FROM EXPECTATIONS INCLUDE GENERAL ECONOMIC CONDITIONS, WEATHER CONDITIONS
WHICH COULD AFFECT CERTAIN OF THE COMPANY'S PRIMARY MARKETS SUCH AS THE
AGRICULTURAL MARKET OR ITS MARKET FOR OUTERWEAR, OR CHANGES IN COMPETITION WHICH
COULD IMPACT ANY OF THE COMPANY'S PRODUCT LINES.
Page 9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
The company is involved as a defendant in lawsuits, claims or disputes
arising in the normal course of business. The settlement of such claims
cannot be determined at this time. Management believes that any
liability resulting from these claims will be substantially mitigated by
insurance coverage. Accordingly, management does not believe the
ultimate outcome of these matters will be significant to its results of
operations, financial position or cash flows.
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).
(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/ Thomas Iacarella
-----------------------------------------
Thomas Iacarella
Vice President, Finance, Secretary
and Treasurer (Principal Financial
and Accounting Officer)
DATE: JUNE 5, 2000
Page 10
