FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: OCTOBER 31, 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.
------------------------------------------------------------
(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 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 DECEMBER 7, 2000
--------------------- -----------------------------------
Common Stock 3,202,282 shares
<PAGE>
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Consolidated Balance Sheet as of October 31, 2000,
January 31, 2000 and October 31, 1999 3
Consolidated Statement of Income for the three and
nine month periods ended October 31, 2000 and 1999 4
Consolidated Statement of Cash Flows for the nine
month periods ended October 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II - OTHER INFORMATION 13
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
10/31/00 01/31/00 10/31/99
-------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents........................................................ $11,926 $ 5,707 $ 4,557
Accounts and notes receivable, less allowance for
doubtful accounts of $551,778, $400,000 and $502,497 as
of 10/31/00, 01/31/00 and 10/31/99, respectively............................... 19,271 22,717 31,339
Inventories:
Materials...................................................................... 13,769 15,650 17,147
In process..................................................................... 3,333 4,997 4,702
Finished goods................................................................. 3,416 3,815 5,489
------- ------- -------
Total inventories.......................................................... 20,518 24,462 27,338
Deferred income taxes............................................................ 2,909 1,919 1,568
Prepaid expenses and other current assets ....................................... 216 566 309
------- ------- -------
Total current assets....................................................... 54,840 55,371 65,111
------- ------- -------
Property, plant and equipment.................................................... 38,743 48,949 49,691
Less: accumulated depreciation................................................. 27,102 33,881 34,848
------- ------- -------
Property, plant and equipment, net......................................... 11,641 15,068 14,843
Other assets, net................................................................ 1,854 3,608 3,610
------- ------- -------
TOTAL ASSETS..................................................................... $68,335 $74,047 $83,564
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt................................................ $1,012 $ 1,044 $ 1,555
Accounts payable................................................................. 4,089 5,320 7,029
Income taxes payable ............................................................ 2,308 90 444
Accrued liabilities and customer advances........................................ 9,110 8,248 10,140
------- ------- -------
Total current liabilities.................................................. 16,519 14,702 19,168
Long-term debt, less current portion............................................. 2,013 3,024 3,024
Other liabilities, primarily compensation and benefits .......................... 1,801 1,802 1,694
Stockholders' equity
Common stock, $1 par value, authorized shares: 100,000,000;
issued: 5,220,614; 5,218,114 and 5,215,489 shares as of
10/31/00, 01/31/00 and 10/31/99, respectively ................................ 5,221 5,218 5,215
Paid in capital................................................................ 3,420 3,177 2,961
Retained earnings.............................................................. 66,930 64,236 63,665
------- ------- -------
75,571 72,631 71,841
Less treasury stock, at cost:
1,980,957; 1,302,007 and 909,848 shares as of 10/31/00,
01/31/00 and 10/31/99, respectively ....................................... 27,569 18,112 12,163
------- ------- -------
Total stockholders' equity................................................. 48,002 54,519 59,678
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....................................... $68,335 $74,047 $83,564
======= ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE 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)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
--------------------- ---------------------
10/31/00 10/31/99 10/31/00 10/31/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales............................. $ 34,678 $ 44,971 $ 98,608 $116,431
Cost of goods sold.................... 30,898 38,486 83,411 97,347
-------- -------- -------- --------
Gross profit........................ 3,780 6,485 15,197 19,084
Operating expenses
Selling............................. 1,496 2,051 5,001 6,043
Administrative...................... 1,844 1,811 5,306 5,357
Gain on sale of businesses.......... (3,136) (966) (3,136) (966)
-------- -------- -------- --------
Operating income................. 3,576 3,589 8,026 8,650
Interest expense...................... (83) (141) (204) (333)
Other income, net..................... 99 79 223 304
-------- -------- -------- --------
Income before income taxes.......... 3,592 3,527 8,045 8,621
Income taxes.......................... 1,929 1,273 3,532 3,112
-------- -------- -------- --------
Net income.......................... $ 1,663 $ 2,254 $ 4,513 $ 5,509
======== ======== ======== ========
Net income per common share:
Basic......................... $ 0.50 $ 0.52 $ 1.28 $ 1.22
Diluted ...................... $ 0.50 $ 0.52 $ 1.28 $ 1.22
Cash dividends paid per share ........ $ 0.18 $ 0.17 $ 0.52 $ 0.49
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE 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 NINE
MONTHS ENDED
-----------------------
10/31/00 10/31/99
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................. $ 4,513 $ 5,509
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......................... 3,011 4,074
Provision for losses on accounts receivable ........... 475 232
Gain on sale of businesses............................. (3,136) (966)
Deferred income taxes.................................. (1,108) (492)
Change in accounts and interest receivable ............ 239 (5,740)
Change in inventories.................................. 2,477 (3,112)
Change in prepaid expenses and other current assets.... 349 85
Change in operating liabilities........................ 1,696 3,196
Other.................................................. 34 (21)
-------- ---------
Net cash provided by operating activities.................. 8,550 2,765
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures....................................... (2,412) (2,619)
Proceeds from the sale of businesses ...................... 12,318 8,228
Other...................................................... 37 45
-------- ---------
Net cash provided by (used in) investing activities........ 9,943 5,654
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of short-term debt................................ 3,500 6,000
Payment of short-term debt................................. (3,500) (6,000)
Long-term debt principal payments.......................... (1,043) (1,053)
Net proceeds from exercise of stock options ............... 45 --
Dividends paid............................................. (1,819) (2,212)
Purchase of treasury stock................................. (9,457) (5,932)
-------- ---------
Net cash provided by (used in) financing activities........ (12,274) (9,197)
-------- ---------
Net increase (decrease) in cash and equivalents............ 6,219 (778)
Cash and cash equivalents at beginning of period ............ 5,707 5,335
-------- ---------
Cash and cash equivalents at end of period .................. $ 11,926 $ 4,557
======== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE 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 of
America 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 of America for complete financial
statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair
representation have been included. Financial results for the three and
nine-month periods ended October 31, 2000 are not necessarily
indicative of the 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
disclosures required by accounting principles generally accepted in the
United States of America. 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 October 31, 1999 and
January 31, 2000 consolidated balance sheets to conform to the current
year presentation. These reclassifications had no impact on
stockholders' equity or the company's results of operations.
3. Options to purchase approximately 225,000 shares of the Company's
common stock were excluded from the diluted earnings per share
calculations for each of the periods ended October 31, 1999 and October
31, 2000, respectively, because their exercise prices were greater than
the average market price of the company's common stock during those
periods. Details of the earnings per share computation are presented
below (dollars in thousands, except per share data):
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
------------------------------------------------------
10/31/00 10/31/99 10/31/00 10/31/99
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income .............................. $ 1,663 $ 2,254 $ 4,513 $ 5,509
========== ========== ========== ==========
Weighted average common shares
outstanding.............................. 3,295,100 4,332,108 3,528,894 4,498,194
Dilutive impact of stock options......... 2,851 739 114 0
---------- ---------- ----------- ----------
Weighted average common and common
equivalent shares outstanding............ 3,297,951 4,332,847 3,529,008 4,498,194
========== ========== ========== ==========
Net income per share:
Basic.................................... $ 0.50 $ 0.52 $ 1.28 $ 1.22
========== ========== ========== ==========
Diluted.................................. $ 0.50 $ 0.52 $ 1.28 $ 1.22
========== ========== ========== ==========
</TABLE>
During the third quarter of fiscal 2001, certain options containing a
cash bonus feature expired. Accordingly, the company reduced its
accrued liabilities and associated deferred tax asset by approximately
$309,000 and $108,000 respectively, and correspondingly increased
additional paid-in capital by approximately $201,000.
4. The company's three reportable segments (Electronics, Plastics and Sewn
Products) are defined by their common technologies, raw materials and
production processes.
Page 6
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
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.
The results of these segments are shown on the following table:
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
-----------------------------------------------
10/31/00 10/31/99 10/31/00 10/31/99
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES
Electronics ................................. $ 12,471 $ 12,181 $ 37,556 $ 37,015
Plastics .................................... 12,982 19,991 42,060 57,969
Sewn Products ............................... 9,225 12,799 18,992 21,447
-------- -------- -------- --------
Total company ............................... $ 34,678 $ 44,971 $ 98,608 $116,431
======== ======== ======== ========
OPERATING INCOME (LOSS)
Electronics ................................. ($ 2,029) $ 679 ($ 967) $ 2,261
Plastics .................................... 5,242 2,599 8,682 5,874
Sewn Products ............................... 363 311 311 515
-------- -------- -------- --------
Total company ............................... $ 3,576 $ 3,589 $ 8,026 $ 8,650
======== ======== ======== ========
</TABLE>
5. On October 29, 1999, the company sold its Glasstite business, recording
a gain of $966,000 in the three and nine-month periods ended October
31, 1999. During the nine months ended October 31, 2000, the company
received $221,000 additional cash proceeds from the sale of Glasstite,
no material gain or loss was recorded as a result of these collections.
On August 28, 2000, the company sold substantially all of the assets of
its Plastic Tank division, part of the company's Plastics Segment, to
Norwesco, Inc. The cash proceeds of the sale were $12.1 million and the
buyers also assumed certain liabilities of the company. In addition,
the company recorded approximately $600,000 to accrue for severance,
legal and other costs related to the Plastic Tank division sale,
reflecting the company's best estimate of costs that it will incur
until these matters are resolved. Through October 31, 2000,
approximately $200,000 of these costs were paid. The sale did not
include the company's plant in Tacoma, Washington, for which the
company is actively pursuing its sale. The Tacoma plant assets,
primarily inventory and manufacturing equipment, are included in the
balance sheet at their estimated net realizable value. As a result of
the above, the company recognized a pre-tax gain of $3.1 million in the
three and nine month periods ended October 31, 2000.
6. Included in the gain on the sale of the Plastic Tank Division was a
goodwill write-off of $1.8 million. The non-deductible nature of this
goodwill write-off increased the gain for income tax purposes, causing
income tax expense to exceed the statutory federal rate. The effective
tax rate, net of goodwill disposition, was 36.0% for the nine months
ended October 31, 2000.
7. In June 2000, the company entered a new agreement with Norwest Bank
South Dakota, N.A. (Norwest) to increase the short-term credit line to
$7.0 million. The terms of this credit line are similar to the $5.0
million line with Norwest that expired on June 30, 2000. At October 31,
2000, the company had no borrowings outstanding under this line of
credit.
Page 7
<PAGE>
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
8. The company terminated its relationship with several customers during
the third quarter of fiscal 2001. Related to these customers, the
company has asset exposure, primarily related to specific inventory
items and certain receivables, of approximately $3.6 million as of
October 31, 2000. The company believes its existing reserves are
appropriate and adequate to cover probable losses related to this
exposure.
Page 8
<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 was $11.9 million at October 31,
2000 compared with $4.6 million one year earlier. On August 28, 2000, the
company sold substantially all of the assets of its Plastic Tank division. The
cash proceeds from the sale were $12.1 million. The sale proceeds were used
primarily to repay $3.5 million in short-term debt and repurchase company
shares. During the nine months ended October 31, 2000, the company repurchased
678,950 shares of its common stock. The average purchase price was $13.93 per
share for a total cost of $9.5 million. In the nine months ended October 31,
2000, the company's seasonal investments in inventories and accounts receivable
were minimized due to the sale of the proprietary skiwear line. Accounts
receivable of $19.3 million decreased $12.1 million from October 31, 1999. Most
of the decrease is due to the sale of the proprietary skiwear line in Sewn
Products and the sale of the Plastic Tank division. Inventory levels decreased
$6.8 million from October 31, 1999 due to the sale of the Plastic tank division
and inventory reduction efforts. The Company retains its $7.0 million line of
credit. Long-term debt, including the current portion, at October 31, 2000 was
$3.0 million compared to $4.6 million in the prior year. The company's capital
resources continue to be sufficient to fund all its activities.
RESULTS OF OPERATIONS
Sales were $34.7 million for the quarter ended October 31, 2000 compared to
$45.0 million in the third quarter of last year. Year-to-date sales were $98.6
million, $17.8 million below the previous year-to-date. The sales decrease is
primarily due to the sale of the Glasstite subsidiary and the Plastic Tank
division along with lower sales in the Sewn Products segment. Operating income
of $3.6 million for the third quarter was even with the third quarter of fiscal
2000. Operating income on a year-to-date basis was $8.0 million, $624,000 below
the previous year. Selling and administrative expenses for the third quarter
were $3.3 million compared to $3.9 million the previous third quarter. The
decrease is due to the sale of the skiwear product line, Glasstite and the
Plastic Tank division. Year-to-date selling and administrative expenses were
$10.3 million compared to $11.4 million in fiscal 2000. The improvement in
non-operating income for the quarter and year-to-date was the result of lower
interest expense and interest earned on cash equivalents from cash proceeds of
the Glasstite and Plastics sale. Earnings per share in the third quarter, on a
diluted basis, were 50 cents per share, compared to 52 cents in the third
quarter of fiscal 2000. Diluted per share earnings for the nine months ended
October 31, 2000 were $1.28 compared with $1.22 the previous fiscal year
nine-month results. Total average weighted shares outstanding for the quarter
and year-to-date were 3.3 million and 3.5 million, respectively, compared to 4.3
million and 4.5 million the previous third quarter and year-to-date,
respectively.
The results for the quarter and nine months include a number of items that the
company does not believe are relevant to future operations or cash flows. The
discussion of operating results, following the tables, is focused on the results
of ongoing businesses exclusive of these items. Adjusted actual results exclude
the results of the company's Plastic Tank division and Glasstite subsidiary and
the gain on sale of those operations. In the current fiscal year, the gain on
the sale of the Plastic Tank division was $3.1 million. Current year write downs
related to the repositioning of the company's Electronics Segment in the third
quarter and severance costs for personnel in two sewing plants to close in the
fourth quarter of fiscal 2001 totaled $2.2 million. The company terminated its
relationship with several customers during the third quarter of fiscal 2001.
Related to these customers, the company has asset exposure, primarily related to
specific inventory items and certain receivables, of approximately $3.6 million
as of October 31, 2000. The company believes its existing reserves are
appropriate and adequate to cover probable losses related to this exposure. In
the prior year, a $1.0 million gain on the sale of the company's Glasstite
subsidiary was recorded along with $550,000 of inventory write downs related to
ongoing operations and a $250,000 write down related to the Plastic Tank
division.
Page 9
<PAGE>
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Certain administrative expenses were allocated to sold businesses and are
unallocated in the segment data. The company's income tax rate in the current
year reflects the write-off of non-deductible goodwill.
The following tables present ongoing business information for the three and nine
month periods ended October 31, 2000 and October 31, 1999.
<TABLE>
<CAPTION>
------------------------------------------------------------------------
(dollars in thousands) THREE MONTHS ENDED | THREE MONTHS ENDED
10/31/2000 | 10/31/1999
------------------------------------------------------------------------
As Adjust- Ongoing As Adjust- Ongoing
Reported ments Business Reported ments Business
<S> <C> <C> <C> <C> <C> <C>
Net sales ................ $ 34,678 $ 2,216 $ 32,462 $ 44,971 $ 9,747 $ 35,224
Gross profit ............. 3,780 (1,811) 5,591 6,485 8 6,477
Operating expenses ....... 3,340 282 3,058 3,862 666 3,196
Gain on sale of businesses 3,136 3,136 -- 966 966 --
------------------------------------------------------------------------
Operating income ......... 3,576 1,043 2,533 3,589 308 3,281
Other (income) expense ... (16) -- (16) 62 (3) 65
------------------------------------------------------------------------
Net income before taxes .. 3,592 1,043 2,549 3,527 311 3,216
Income taxes ............. 1,929 1,011 918 1,273 112 1,161
------------------------------------------------------------------------
Net income ............... $ 1,663 $ 32 $ 1,631 $ 2,254 $ 199 $ 2,055
========================================================================
<CAPTION>
------------------------------------------------------------------------
(dollars in thousands) NINE MONTHS ENDED | NINE MONTHS ENDED
10/31/2000 | 10/31/1999
------------------------------------------------------------------------
As Adjust- Ongoing As Adjust- Ongoing
Reported ments Business Reported ments Business
Net sales ................ $ 98,608 $ 12,967 $ 85,641 $116,431 $ 31,587 $ 84,844
Gross profit ............. 15,197 (96) 15,293 19,084 2,727 16,357
Operating expenses ....... 10,307 1,180 9,127 11,400 2,176 9,224
Gain on sale of businesses 3,136 3,136 -- 966 966 --
------------------------------------------------------------------------
Operating income ......... 8,026 1,860 6,166 8,650 1,517 7,133
Other (income) expense ... (19) (3) (16) 29 (19) 48
------------------------------------------------------------------------
Net income before taxes .. 8,045 1,863 6,182 8,621 1,536 7,085
Income taxes ............. 3,532 1,306 2,226 3,112 554 2,558
------------------------------------------------------------------------
Net income ............... $ 4,513 $ 557 $ 3,956 $ 5,509 $ 982 $ 4,527
========================================================================
</TABLE>
Page 10
<PAGE>
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Following is a table of adjusted results by segment:
ADJUSTED SALES AND OPERATING INCOME BY SEGMENT
<TABLE>
<CAPTION>
-------------------------------------------------------------
(dollars in thousands) THREE MONTHS ENDED | NINE MONTHS ENDED
OCTOBER 31 | OCTOBER 31
-------------------------------------------------------------
2000 1999 Percent 2000 1999 Percent
---- ---- ------- ---- ---- -------
Change Change
------- -------
<S> <C> <C> <C> <C> <C> <C>
NET SALES
Electronics .......... $12,471 $12,181 2% $37,556 $37,015 1%
Plastics ............. 10,766 10,244 5% 29,093 26,382 10%
Sewn Products......... 9,225 12,799 -28% 18,992 21,447 -11%
------------------- -------------------
Total company ........ $32,462 $35,224 -8% $85,641 $84,844 1%
=================== ===================
<CAPTION>
2000 1999 Percent 2000 1999 Percent
---- ---- ------- ---- ---- -------
Change Change
------- -------
OPERATING INCOME (LOSS)
Electronics........... $ 115 $ 980 -88% $ 1,177 $ 2,562 -54%
Plastics.............. 2,110 1,887 12% 5,312 4,524 17%
Sewn Products......... 419 561 -25% 367 765 -52%
Unallocated expenses.. (111) (147) -24% (690) (718) -4%
------------------- -------------------
Total company......... $ 2,533 $ 3,281 -23% $ 6,166 $ 7,133 -14%
=================== ===================
</TABLE>
Sales from ongoing operations were $32.5 million for the quarter ended October
31, 2000, down $2.8 million from the third quarter of the prior year. For the
nine months ended October 31, 2000, comparable sales were $85.6 million,
slightly above last year's $84.8 million. The ongoing Plastic and Electronics
segments generated sales increases over last year for both the third quarter and
the year-to-date. Adjusted operating income for the third quarter was $2.5
million compared to $3.3 million the previous third quarter. Adjusted operating
income for the nine months ended October 31, 2000 was $6.2 million compared to
$7.1 million the previous year.
Electronics segment third-quarter sales were $12.5 million, which was an
increase of 2 percent or $290,000 over the same period last year. The increase
in sales was due primarily to stronger deliveries from the Flow Controls
operation. Improved marketing and product introduction increased Flow Control
sales by more than 20 percent over the third quarter last year. Adjusted
operating income, however, declined to $115,000 from $980,000 the prior year.
The lower operating income reflected losses in the contract manufacturing
operations while repositioning its customer base and exiting unprofitable
contracts. Operating income is expected to improve as new contracts begin
shipping during the next six months. Sales for the nine months totaled $37.6
million compared to $37.0 million for the same period in fiscal 2000. Adjusted
operating income for the nine months was $1.2 million, down $1.4 million from
the prior year's $2.6 million.
Plastics segment sales, from ongoing operations, of $10.8 million for the third
quarter were 5 percent more than the same period last year. Sales of $29.1
million for the first nine months were 10 percent greater than the $26.4 million
generated in the first nine months of fiscal 2000. Adjusted third quarter
operating income for the ongoing operations of the segment was $2.1 million, up
12% from $1.9 million in the previous third quarter. Engineered Films sales to
construction and manufactured housing markets remained strong for the quarter
and the first nine months. Year-to-date adjusted operating income was $5.3
million compared to $4.5 million the
Page 11
<PAGE>
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
first nine months of last fiscal year. The increased operating income was due to
higher sales, improved operating efficiencies and capacity utilization.
Sewn Products segment sales of $9.2 million for the third quarter were behind
the $12.8 million in the same period last year. Year-to-date sales of $19.0
million were $2.5 million below the $21.5 million nine-month results of fiscal
2000. Apparel sales continue to decline as the market for domestic made
outerwear continues to shrink. Adjusted third quarter operating income of
$419,000 compared unfavorably to $561,000 generated in the third quarter of
fiscal 2000. Year-to-date adjusted operating income was $367,000, $398,000 less
than last year's nine-month total.
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 12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings: None
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: An 8-K was filed September 12, 2000,
concerning the August 28, 2000 sale of the company's Plastics
Division assets.
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: DECEMBER 7, 2000
Page 13
