-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LeRpTPDSkKtNsrb/wtabAXx2CGlxjugn5buwxW/TpTe2qoAbtNGFsos2fm1zM2tG +84JU2uwRX7SfllWMXBYew== 0000897101-97-000453.txt : 19970428 0000897101-97-000453.hdr.sgml : 19970428 ACCESSION NUMBER: 0000897101-97-000453 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970425 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAVEN INDUSTRIES INC CENTRAL INDEX KEY: 0000082166 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 460246171 STATE OF INCORPORATION: SD FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07982 FILM NUMBER: 97587136 BUSINESS ADDRESS: STREET 1: 205 E 6TH ST STREET 2: PO BOX 5107 CITY: SIOUX FALLS STATE: SD ZIP: 57117 BUSINESS PHONE: 6053362750 MAIL ADDRESS: STREET 1: P O BOX 5107 CITY: SIOUX FALLS STATE: SD ZIP: 57117-5107 10-K 1 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, 1997 [ ] 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: None Securities registered pursuant to Section 12(g) of the Act: Common stock, $1 par value (Title of each class) 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 $22.625 per share as reported on the NASDAQ National Market System on April 16, 1997 was $97,636,310. Shares of common stock outstanding at April 16, 1997: 4,837,250. 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, 1997 and Proxy Statement for registrant's 1997 annual meeting, a definitive copy of which is to be filed on April 18, 1997. 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, 1997 is included in this report. PART I. ITEM IN FORM 10-K REFERENCE - ------- ----------------- --------- Item 1. Business Business, pages 4-7, this document, Business Segments, page 2, and Sales by Markets, page 17, Annual Report to Shareholders 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 24, trant's Common Eleven-year Financial Equity and Related Summary, pages 18-19, Stockholder Matters and inside back cover, Annual Report to Shareholders Item 6. Selected Financial Data Eleven-Year Financial Summary, pages 18-19, Annual Report to Shareholders Item 7. Management's Discussion Financial Review and and Analysis of Analysis, pages 20-23, Financial Condition Annual Report to and Results of Shareholders Operations Item 8. Financial Statements and Annual Report to Share- Supplementary Data holders, pages 25-36 Item 9. Changes in and Disagree- Changes in and Disagree- ments with Accountants ments with Accountants on Accounting and on Accounting and Financial Disclosure Financial Disclosure, page 9, this document PART III. - --------- 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, 1997 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 eight 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 line was added via acquisition in fiscal 1987. Page 17 in the company's Annual Report to Shareholders, incorporated herein by reference, provides financial information regarding sales by markets. 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, more than one business segment may serve the product markets identified above. Page 2 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 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 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. 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 vary with the type of product, but the company frequently competes with a number of assembly manufacturers on any given bid request. Home office personnel sell flow control devices directly to original equipment manufacturers (OEMs) and distributors. Company sales representatives sell automated systems directly to feedmills and bakeries. Considerable competition exists for feedmill business. Plastics - Products in this segment include heavy-duty sheeting for industrial and agricultural applications; fiberglass, polyethylene and dual-laminate tanks for industrial and agricultural use; high altitude balloons for public and commercial research; and pick-up truck toppers sold in the small truck after-market. The company's capability to produce dual-laminate tankage resulted from the aquisition of Norcore Plastics in January 1997. The company sells plastic sheeting to distributors in each of the various markets it serves. The company extrudes a significant portion of the film converted for its commercial products and believes it is one of the largest sheeting converters in the United States. A number of suppliers of sheeting compete with Raven on both price and product availability. Home office personnel and manufacturer's representatives sell storage tanks 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 and dual-laminate products, but polyethylene tanks tend to be commodity products and subject to intense price competition. The company sells research balloons 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., using 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 variety of recreational activities, including skiing, hunting and fishing. 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 many 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 Gore-Tex(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 directly 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 1997. However, the company sells sewn products to several large customers. In fiscal 1997, the top five customers in the Sewn Products segment accounted for more than two-thirds of the 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. Most of these sales carry net thirty 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. Certain sales to agricultural customers offer spring dating terms for late fall and early winter shipments. 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, predicting future material shortages and their impact on Raven is not possible. 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. Most of the company's research and development expenditures are directed toward 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 29 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, 1997, the company's backlog of firm orders totaled $38.1 million. Comparable backlog amounts as of February 1, 1996 and 1995 were $32.5 million and $29.7 million, respectively. Item 2. Properties
Square Business Location Feet Use Segments - -------- ------ --- -------- Sioux Falls, SD 150,000 Corporate office and Corporate and electronics manufacturing Other Electronics 73,300 Storage tank manufacturing Plastics 68,400 Sewn products warehouse Sewn Products 62,300 Plastic sheeting manufacturing Plastics 59,000 Plastic sheeting and hot-air balloon Plastics manufacturing Sewn Products 31,400 Storage tank manufacturing Plastics 27,000 Offices and material handling facility Sewn Products 25,300 Inflatable manufacturing Sewn Products 10,200 Machine Shop Corporate and Other 6,200 Training/meeting center Corporate and Other Dunnell, MN 81,500 Pickup-truck topper manufacturing Plastics Eloy, AZ 51,600 Pickup-truck topper manufacturing Plastics Albertville, AL 49,600 Storage tank manufacturing Plastics Sulphur Springs, TX *45,400 Research balloon manufacturing Plastics Springfield, OH 30,000 Plastic sheeting manufacturing Plastics Tacoma, WA *26,500 Storage tank manufacturing Plastics Huron, SD 24,100 Sewing plant Sewn Products Washington Court House, OH 21,500 Storage tank manufacturing Plastics St. Louis, MO 21,000 Electronics manufacturing Electronics Gordo, AL *20,000 Feedmill automation equipment manufacturing Electronics Beresford, SD 20,000 Sewing plant Sewn Products Madison, SD 20,000 Sewing plant Sewn Products DeSmet, SD 15,000 Sewing plant Sewn Products Salem, SD 15,000 Sewing plant Sewn Products Parkston, SD 14,000 Sewing plant Sewn Products
* Leased short-term Most of the company's manufacturing plants also serve as distribution centers and contain offices for sales, engineering and manufacturing support staff. The company believes that its properties are, in all material respects, in good condition and are adequate to meet existing production needs. The company owns 6.95 acres of undeveloped land adjacent to the other company property in Sioux Falls which is available for expansion. 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 62 President and Chief April 1971 to present Executive Officer Gary L. Conradi 57 Vice President, January 1980 to present Corporate Services Ronald M. Moquist 51 Executive Vice January 1979 to present President Arnold J. Thue 58 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 1997 Annual Report to Shareholders: Consolidated Balance Sheets Consolidated Statements of Income Consolidated Statements of Stockholders' Equity 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, 1997. (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 1997 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 25, 1997 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 25, 1997 By: /S/ David A. Christensen - ------------------------------ ------------------------------------- Date David A. Christensen President (Principal Executive Officer and Director) April 25, 1997 /S/ Arnold J. Thue - ------------------------------ ------------------------------------- Date Arnold J. Thue Vice President, Finance, Secretary and Treasurer (Principal Financial and Accounting Officer) Directors: April 25, 1997 /S/ Conrad J. Hoigaard - ------------------------------ ------------------------------------- Date Conrad J. Hoigaard April 25, 1997 /S/ John C. Skoglund - ------------------------------ ------------------------------------- Date John C. Skoglund April 25, 1997 /S/ Mark E. Griffin - ------------------------------ ------------------------------------- Date Mark E. Griffin April 25, 1997 /S/ Kevin T. Kirby - ------------------------------ ------------------------------------- Date Kevin T. Kirby April 25, 1997 /S/ Anthony W. Bour - ------------------------------ ------------------------------------- Date Anthony W. Bour April 25, 1997 /S/ Thomas S. Everist - ------------------------------ ------------------------------------- Date Thomas S. Everist 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 36 of the 1997 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 12, 1997 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS for the years ended January 31, 1997, 1996 and 1995 (Dollars in thousands)
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 ----------- ---------- ---------- ---------- ----------- ----------- Deducted in the balance sheet from the asset to which it applies: Allowance for doubtful accounts: Year ended January 31, 1997 $340 $ 88 None $ 88 $340 ==== ==== ==== ==== Year ended January 31, 1996 $350 $ 68 None $ 78 $340 ==== ==== ==== ==== Year ended January 31, 1995 $350 $135 None $135 $350 ==== ==== ==== ==== Note: (1) Represents uncollectible accounts receivable written off during the year, net of recoveries.
EX-11 2 DETAILED COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 DETAILED COMPUTATION OF EARNINGS PER SHARE (Dollars in thousands, except per share data)
For the year ended January 31 ------------------------------------------- PER SHARE DATA 1997 1996 1995 ---- ---- ---- Net income $7,688 $6,197 $6,088 ====== ====== ====== Net income per common and common equivalent shares: Primary $1.61 $1.30 $1.27 ====== ====== ====== Fully diluted (1) $1.61 $1.29 $1.27 ====== ====== ====== AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES Primary: Weighted average number of common shares outstanding 4,738,511 4,735,223 4,726,026 Common equivalent shares: Dilutive stock options, using Treasury Stock Method 36,649 46,962 65,057 --------- --------- --------- 4,775,160 4,782,185 4,791,083 ========= ========= ========= Fully diluted (1): Weighted average number of common shares outstanding 4,738,511 4,735,223 4,726,026 Common equivalent shares: Dilutive stock options, using Treasury Stock Method 38,217 51,227 65,057 --------- --------- --------- 4,776,728 4,786,450 4,791,083 ========= ========= ========= (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%.
EX-13 3 1997 ANNUAL REPORT 1997 ANNUAL REPORT FOR THE FISCAL YEAR ENDED JANUARY 31 RAVEN INDUSTRIES OPERATING INCOME CLIMBS 25% * RECORD SALES UP 16% RECORD NET INCOME CLIMBS 24% * STEADILY IMPROVING NET MARGINS CONTENTS Financial Highlights ........................1 Business Segments ........................2 Segment Performance ........................3 Letter to Shareholders .......................14 Mission Statement .......................16 Sales by Markets .......................17 Eleven-Year Financial Summary .......................18 Financial Review & Analysis .......................20 Stock Price, Volume, P/E Performance & Quarterly Summary .......................24 Financial Statements .......................25 Notes to Financial Statements .......................29 Report of Independent Accountants .......................36 Investor Information ........Inside back cover CORPORATE PROFILE Founded in 1956, Raven Industries is a diversified manufacturer based in Sioux Falls, SD. It supplies plastic, electronic and special apparel products to well-defined niche markets where it maintains a dominant position. In the past three years, the company has moved away from defense products, including special-weather and chemical-suit apparel for the U.S. Army. Today Raven operates three reportable business segments: Plastics, Electronics and Sewn Products. It manufactures products such as ultrathin and rugged reinforced plastic films, large-volume plastic and fiberglass tanks, superior-performance outerwear and pickup-truck toppers. The company also makes industrial controls, computerized flow control hardware and software--including sprayer control and chemical injection systems, and ultrasonic soil-depth control devices--as well as high-altitude research balloons for NASA, the historic core product of the company which has led to a variety of other products based on this foundation technology. Raven's cash dividend has risen every year since 1986 and currently management targets 15-20% average annual EPS growth and annual sales growth of 15%. SAFE HARBOR STATEMENT Certain sections of this report contain 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. FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per-share data) For the years ended January 31 1997 1996 Change - ------------------------------------------------------------------------------------------------------ OPERATIONS Sales.......................................................... $ 139,441 $ 120,444 15.8% Operating income............................................... 11,971 9,561 25.2% Pretax income.................................................. 11,915 9,566 24.6% Net income..................................................... 7,688 6,197 24.1% PER SHARE Net income..................................................... $ 1.61 $ 1.30 23.8% Cash dividends................................................. 0.50 0.45 11.1% Book value..................................................... 11.73 10.42 12.6% PERFORMANCE Percentage pretax profit on sales.............................. 8.5% 7.9% 7.6% Return on sales................................................ 5.5% 5.1% 7.8% Return on average assets....................................... 10.4% 9.3% 11.8% Return on beginning shareholders' equity....................... 15.6% 13.6% 14.7% Long-term debt to total capitalization......................... 5.3% 5.4% - 1.9% Weighted average shares outstanding (in thousands)............. 4,775 4,782 - 0.1% Number of employees............................................ 1,387 1,368 1.4% Number of shareholders, year-end............................... 3,011 3,190 - 5.6%
NET PROFIT MARGIN (Percent) [PLOT POINTS CHART] YEAR % '92 5.3% '93 5.4% '94 5.7% '95 5.0% '96 5.1% '97 5.5% TOTAL ASSETS (Dollars in millions) [PLOT POINTS CHART] YEAR ASSETS '92 46,528 '93 54,813 '94 60,597 '95 65,636 '96 67,553 '97 80,662 EARNINGS PER SHARE (Dollars) [PLOT POINTS CHART] YEAR EPS '92 1.13 '93 1.27 '94 1.45 '95 1.27 '96 1.30 '97 1.61 DIVIDENDS PAID PER SHARE (Dollars) [PLOT POINTS CHART] YEAR DIVIDEND PER SHARE '92 0.25 '93 0.28 '94 0.33 '95 0.39 '96 0.45 '97 0.50 1 BUSINESS SEGMENTS
For the years ended January 31 (Dollars in thousands) 1997 1996 1995 1994 1993 1992 - ----------------------------------------------------------------------------------------------------------------------- ELECTRONICS Sales.......................... $ 43,861 $ 32,962 $ 31,959 $ 35,771 $ 34,538 $ 35,243 Operating income............... 4,913 4,600 2,753(a) 4,529 5,146 5,963 Identifiable assets............ 23,251 19,204 16,912 18,838 19,082 15,622 Capital expenditures........... 1,071 807 552 985 953 823 Depreciation & amortization.... 1,273 1,077 872 804 712 639 PLASTICS Sales.......................... $ 59,158 $ 55,281 $ 48,971 $ 40,386 $ 36,070 $ 31,568 Operating income............... 4,187 3,267 3,470 2,815 2,625 2,406 Identifiable assets............ 33,879 26,092 25,817 16,796 13,769 12,874 Capital expenditures........... 2,539 2,973 6,387 3,587 1,305 1,194 Depreciation & amortization.... 2,678 2,414 1,845 1,263 1,245 1,302 SEWN PRODUCTS Sales.......................... $ 36,422 $ 32,201 $ 40,790 $ 45,311 $ 40,606 $ 33,798 Operating income (loss)........ 2,871 1,694 2,913 3,096 1,375 (231) Identifiable assets............ 14,990 13,934 16,384 16,510 17,760 12,879 Capital expenditures........... 379 396 765 1,141 888 1,620 Depreciation & amortization.... 583 719 832 803 683 570 CORPORATE & OTHER Identifiable assets............ $ 8,542 $ 8,323 $ 6,523 $ 8,453 $ 4,202 $ 5,153 Capital expenditures........... 20 10 49 71 13 235 Depreciation & amortization.... 32 32 33 27 23 26 TOTAL COMPANY Sales.......................... $ 139,441 $ 120,444 $ 121,720 $ 121,468 $ 111,214 $ 100,609 Operating income............... 11,971 9,561 9,136(a) 10,440 9,146 8,138 Identifiable assets............ 80,662 67,553 65,636 60,597 54,813 46,528 Capital expenditures........... 4,009 4,186 7,753 5,784 3,159 3,872 Depreciation & amortization.... 4,566 4,242 3,582 2,897 2,663 2,537 (a)INCLUDES THE $1.8 MILLION BETA RAVEN CHARGE (SEE NOTE 5).
PRODUCT LINES BY BUSINESS SEGMENT [PHOTO] ELECTRONICS * Contract electronics manufacturing * Flow controls- precision farming * Feedmill and bakery automation * Military radio assemblies [PHOTO] PLASTICS * Sheeting * Storage/sprayer tanks * Research balloons * Pickup-truck toppers [PHOTO] SEWN PRODUCTS * Performance outerwear * Sport balloons * Inflatables 2 SEGMENT PERFORMANCE ALL THREE OF RAVEN'S OPERATING SEGMENTS SHOWED SALES GAINS BOTH FOR THE FINAL QUARTER AND FULL YEAR OF FISCAL 1997. LOOKING FORWARD THROUGH THE END OF THE DECADE, RAVEN WILL CONTINUE TO ENHANCE AND EXPAND ITS CORE TECHNOLOGIES. THE COMPANY'S GOAL IS AN AVERAGE ANNUAL GAIN OF 15% IN REVENUES AND 15-20% GROWTH IN NET EARNINGS. ELECTRONICS FLOW CONTROLS--SALES UP 24% Raven engineers continue to develop, refine and update flow-control products for today's increasingly sophisticated farmers, helping them maximize yield while containing costs. Escalating demand for such "precision farming" hardware and software pushed Raven's fiscal 1997 sales to $16.69 million, up 24% from fiscal 1996's $13.47 million. NEW GLOBAL-POSITIONING SATELLITE TECHNOLOGY During the year, the company introduced a new variable-rate controller that utilizes global-positioning satellite (GPS) technology to enable farmers to apply chemicals with far more precision and control. The technology operates on a grid system. The operator divides his farmland into a series of zones or segments and then pre-programs the controller to apply chemicals based on the desired mixture or strength prescribed by him for each area plotted. The system can control the application of various chemicals--liquid, granular, or nitrate fertilizer (NH3). Raven also introduced a new line of control systems for both planting and harvesting. The precision depth control system for seed-planting allows the farmer to seek optimum soil depth based on moisture retention, drainage and emergence. The height control system for combines senses changes immediately in front of the cutter and allows height position with one-half inch accuracy. This feature allows the combine operator the capability of FLOW CONTROLS SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 4.622 '93 6.542 '94 8.229 '95 10.223 '96 13.467 '97 16.689 3 ELECTRONICS SEGMENT SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 35.243 '93 34.538 '94 35.771 '95 31.959 '96 32.962 '97 43.861 operating very close to the ground, maximizing the intake of low-canopy crops such as beans, with reduced risk of equipment damage. CLIMB IN EXPORT SALES Export sales are becoming increasingly important in electronic controls for agriculture. As the U.S. market matures, greater penetration of foreign markets is needed to maintain the 29% compound annual growth rate Raven has enjoyed over the past five years--one of the company's most consistent growth areas. CONTRACT MANUFACTURING--SALES DOUBLE Contract manufacturing sales doubled in fiscal 1997 from $9 million the year previous to $18 million. In just over a year, Raven revamped its Electronic Systems Division, moving from military electronics contracting to virtually all commercial work. In this short time frame, the company has developed approximately 20 significant new customers. Products now being produced at Raven include specialty computer boards, heating and air conditioning control systems and sophisticated global positioning equipment. SUPERIOR ENGINEERING STAFF Raven has progressed rapidly thanks to a superior engineering staff that specializes in electronic and mechanical design as well as value-engineering in an environment where Total Quality Manufacturing (TQM) has been emphasized for years and the company holds ISO 9002 certification. Raven is now firmly established as a superior-quality contract manufacturer and its management expects to maintain a 20% or better annual growth rate in this area for the foreseeable future. PROCESS CONTROLS--REFOCUSING EFFORTS Beta Raven sales of $9.2 million in fiscal 1997 dropped 12% from the $10.5 million level of fiscal 1996. Sales declined in the contract manufacturing area and remained flat in the process controls business as Beta Raven continued to refocus its efforts on what once was its core business--primarily feed mills and chemical and industrial plants. During the past year the automation of a large chemical plant for an international company was successfully completed. This $1 million-plus installation is expected to be the first of several projects for controlling the flow of materials in chemical plant operations for this company alone. 4 [PHOTO] Raven engineers continue to develop, refine and update flow-control products for today's increasingly sophisticated farmers, helping them maximize yield while containing costs. 5 PLASTICS SEGMENT SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 31.568 '93 36.070 '94 40.386 '95 48.971 '96 55.281 '97 59.158 ENGINEERED FILM SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 14.390 '93 15.129 '94 15.272 '95 19.815 '96 23.653 '97 25.799 We believe there will continue to be opportunities to apply our technology to a variety of process industries, and with operations now on a firm and profitable foundation we can successfully pursue them. Contract manufacturing at Beta Raven has also been refocused, working now with a relatively small group of accounts with reasonable growth prospects and secure financing. During this process, some sales were sacrificed but long-term prospects are much improved. PLASTICS ENGINEERED FILMS--A BANNER YEAR Raven's engineered films range from ultra-thin 0.25 millimeter plastic sheeting--used in its manufacture of high-altitude research balloons--to heavy-duty 40 millimeter films utilized for pit lining and in capping landfills. The markets for these films range from manufactured housing, now the company's largest market, to pit liners, landfill covers, construction enclosures, house-wrap, vapor barriers for residential construction, general industrial use, agriculture, and NASA-employed space-research balloons. Total sales of engineered films for the year ended January 31, 1997, totaled $25.8 million, up 9% from last year's $23.7 million. SIGNIFICANT CAPACITY EXPANSION The past year was marked by significant capacity expansion. In Springfield, Ohio, Raven completed a new 30,000-square-foot plant to improve service to customers and reduce shipping costs. In Sioux Falls, the extrusion facility was not only expanded but now operates 24 hours per day, 7 days a week, and a further expansion is being planned for fiscal 1998. HIGH-ALTITUDE RESEARCH BALLOON BUSINESS UP 18% The company's high-altitude research balloon business--the core business on which Raven was founded 41 years ago--remains a viable and consistently profitable if small product line. Raven produces its high-altitude balloons in a plant dedicated solely for this purpose in Sulfur Springs, Texas. Sales increased 18% in fiscal 1997. 6 [PHOTO] Raven has progressed rapidly thanks to a superior engineering staff that specializes in electronic and mechanical design as well as value-engineering in an environment where Total Quality Manufacturing (TQM) has been emphasized for years and the company holds ISO 9002 certification. 7 PLASTIC TANK SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 9.682 '93 11.341 '94 12.397 '95 13.238 '96 15.838 '97 15.702 PICKUP-TRUCK TOPPER SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 5.183 '93 7.672 '94 10.931 '95 13.512 '96 15.402 '97 17.657 PLASTIC TANKS Plastic tank sales of $15.2 million in fiscal 1997 declined 4% from the previous year's $15.8 million due to lower agricultural sales. Following a 20% increase in fiscal 1996, the falloff was not expected at the beginning of the year. The agricultural market, however, is typically a cyclical business and Raven's sales reflected a downturn of the overall market. This new year, however, is off to a good start. Orders placed in early fiscal 1998 are substantially ahead of the pace of fiscal 1997 and orders for large poly-storage tanks are particularly strong. Improving sales in this area is especially important as the company has made substantial investments in plant and equipment. ACQUISITION In January 1997, Raven acquired Tacoma, Washington-based Norcore Plastics, Inc. Norcore's business is primarily in the fabricating of fiberglass tanks for industrial use, utilizing `dual laminate' technology, which consists of combining specialty plastic films with the tank-manufacturing process to produce tanks capable of handling high-purity liquids and chemicals. One of the most important markets for dual-laminate containers is the semiconductor industry. Other markets include mining, paper and pulp and the chemical-process industry. The acquisition of Norcore, when coupled with Raven's existing fiberglass tank business and its poly tank operations, give the company the most complete product offering in the plastic tank business. Norcore's annual sales level of approximately $9 million, combined with the anticipated increase in Raven's existing poly and fiberglass tank business this coming year, should have a positive impact on overall company performance in fiscal 1998. PICKUP-TRUCK TOPPERS--SALES AND PROFIT UP Sales of $17.7 million for the Glasstite truck topper line in fiscal 1997 rose 15% over the $15.4 million in the previous year. While overall sales in the topper market remain weak, Raven management believes that the products the company offers will continue to gain wider acceptance and sales strength. Profitability, while well below the company average, did improve in fiscal 1997, and further gains are expected in this new year. The Arizona plant, which opened in fiscal 1996, is now operating at a reasonable level of 8 [PHOTO] Raven's plastic extrusion facility in Sioux Falls, SD manufactures plastic sheeting ranging from as thin as 0.25 millimeters to a heavy-duty 40 millimeters. The films are used for pit lining and capping landfills as well as construction enclosures, house-wrap and NASA space-research balloons. Engineered film sales rose 9% in FY 1997 to $25.8 million. 9 efficiency and producing quality products. Additional sales volume is still needed to produce a better bottom line. As new truck models continue to proliferate, requiring continual style changes, varying sizes and a multitude of colors with a quality automotive finish, the Raven product line continues to gain momentum. The company has made the investment in styling, design and the facilities to manufacture a product that matches the appearance of new truck models. THE NEW GLASSTITE TARGA AND GLASSTITE VISION II During the past year, Raven introduced a new cab-high topper called the Glasstite Targa. Targa's stylish design has been gaining in popularity and management anticipates a substantial jump in sales now that all of the designs for the various pickup-truck models are complete. A second new product, the Glasstite Vision II, was introduced at the industry's national trade show in February 1997 and created a great deal of excitement with Raven dealers. The Vision II is a premium-priced product with a high-rise profile, giving it considerably more internal height for storage than traditional cab-high models. Sales of the Vision II will commence in April 1997. These new models, coupled with continued penetration of the West Coast market, should provide strong impetus to substantial pickup-truck topper revenue and profit growth this year. SEWN PRODUCTS A REMARKABLE RECOVERY Favorable weather conditions helped stimulate consumer demand for rugged outerwear this past year. This--combined with the continuing growth of our primary market, large catalog retailers--pushed total segment sales up 13% to $36.4 million from the previous year's $32.2 million. Higher volumes and steady demand during fiscal 1997 kept Raven's manufacturing plants running at a favorable capacity level, improving efficiencies and boosting profit margins. One of management's major goals for fiscal 1998 is to attain an even higher level of flexibility in manufacturing operations in order to be more responsive in servicing customer demand. The first full year of operations under an in-house-developed Manufacturing SEWN PRODUCTS SEGMENT SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 33.798 '93 40.606 '94 45.311 '95 40.790 '96 32.201 '97 36.422 10 [PHOTO] Tank orders placed in early fiscal 1998 are substantially ahead of the pace of fiscal 1997 and orders for large poly-storage tanks are particularly strong. Improving sales in this area is especially important as this is where the company's investments in plant and equipment have been made. 11 SEVERE-WEATHER UNIFORM SALES (Dollars in millions) [BAR CHART] YEAR SALES '95 1.068 '96 2.403 '97 4.298 SPORTSWEAR SALES (Dollars in millions) [BAR CHART] YEAR NET SALES '92 17.946 '93 20.582 '94 28.143 '95 32.116 '96 26.426 '97 29.901 Resource Planning (MRP II) system also proved highly successful. Very high levels of inventory accuracy have been achieved with significantly improved turnover rates and customer satisfaction--virtually eliminating shipment errors, shortages and related problems. A STRONG YEAR FOR OUTERWEAR Apparel sales rose 13% to $29.9 million from the previous year's $26.4 million, and superior-quality "performance outerwear" continues to be the focus of the Sewn Products segment. Despite the general decline of the U.S. apparel industry as manufacturers move overseas, we see a continuing demand for our products. Severe-weather uniforms, an important product area in this past year's growth, was a market Raven first entered in fiscal 1995. Sales of high-quality cold- and severe-weather uniforms for police departments and government agency personnel climbed from $2.4 million in fiscal 1996 to $4.3 million in fiscal 1997. The companies Raven sells to are financially strong entities and offer excellent potential for continued growth. Customer demand for special hunting outerwear also was strong this past year--and orders for fiscal 1998 are coming in at a record pace. CLEAN-ROOM SUITS SALES UP 58% While a small part of segment sales, Raven's top-quality clean-room suits accounted for a 58% rise in sales in fiscal 1997 to $1.9 million from fiscal 1996's $1.2 million. AEROSTAR SALES CLIMB 12% Aerostar completed its most successful year with sales increases in both hot-air balloons and inflatable shapes produced for amusement parks, parades and advertising. Total sales for fiscal 1997 rose 12% to $6.5 million from $5.8 million the previous year. Sales of inflatables climbed 11% for the year while hot-air balloon sales increased 14%. As with other Raven product lines, the use of computerized design and cutting equipment gives Aerostar the ability to design and manufacture complex shapes with precision accuracy. This is paramount in satisfying the needs of Aerostar customers, which include some of the most well-known companies in America. 12 [PHOTO] The use of computerized design and cutting equipment gives Raven the ability to design and manufacture complex shapes with precision accuracy. This is paramount in satisfying the needs of our customers, which include some of the most well-known companies in America. 13 TO OUR SHAREHOLDERS LAST YEAR'S ANNUAL REPORT COVER HIGHLIGHTED AN AGGRESSIVE AGENDA FOR FISCAL 1997. WE WENT ON RECORD THAT WE PLANNED TO MAXIMIZE REVENUE GROWTH, DOING THIS PRIMARILY THROUGH NEW PRODUCT INTRODUCTIONS. WE TOLD YOU WE ALSO PLANNED TO IMPROVE PRODUCT QUALITY, DOUBLE ELECTRONICS CONTRACT BUSINESS, CONTINUE 30% GROWTH IN "PRECISION FARMING" ELECTRONICS SYSTEMS, BOOST OPERATING MARGINS IN OUR PLASTICS SEGMENT, AND ACHIEVE RECORD EARNINGS. FOR THE MOST PART, WE REACHED WHAT WE STRIVED FOR--BOTH RAVEN'S SALES AND EARNINGS CLIMBED TO RECORD LEVELS IN FISCAL 1997. SALES ROSE 16% TO $139.4 MILLION OVER FISCAL 1996'S $120.4 MILLION. NET INCOME OF $7.7 MILLION IMPROVED 24% OVER THE PREVIOUS YEAR'S $6.2 MILLION AND EARNINGS PER SHARE OF $1.61 ALSO INCREASED 24% OVER THE $1.30 EARNED THE PREVIOUS YEAR. Excerpt from last year's annual report cover Raven Industries AGENDA for year ending 1/31/97 Maximize revenue growth thru product intros, productivity gains Watchdog waste while improving quality Double electronics contract business, adding $10 million to topline Continue 30% growth in electronics for precision farming In plastics, boost operating margins Earn significantly more than previous best year NEW PRODUCT INTRODUCTIONS We introduced several new products in the agricultural electronics field this past year, including precision depth controls for planting, tillage, and harvesting operations. Market testing was generally very positive and where fine tuning was indicated, we did it. A new variable rate controller was introduced using global-positioning satellite (GPS) technology for applying chemicals and fertilizer. Our height- and depth-control devices are relatively new to the North American market, but we feel demand for this type of highly sophisticated product will grow rapidly when its benefits become more widely known. 14 SHAREHOLDERS' EQUITY (Dollars in millions) [PLOT POINTS CHART] '92 30.601 '93 35.530 '94 41.100 '95 45.526 '96 49.151 '97 56.729 DEBT TO TOTAL CAPITAL (Percent) [BAR CHART] YEAR % '92 10.7% '93 8.3% '94 5.8% '95 8.4% '96 5.4% '97 5.3% SALES PER EMPLOYEE (Dollars in thousands) [BAR CHART] '92 80 '93 85 '94 85 '95 86 '96 88 '97 101 As spelled out in our agenda, a major priority was increasing our contract electronics business. As the year closed on January 31, 1997, we grew from $9 million in fiscal 1996 to $18 million for fiscal 1997--and we expect continuing future growth in this area. We have become recognized as an efficient and high-quality producer in a relatively short time with a number of substantial customers. INCREASED PROFITABILITY IN PLASTICS In Plastics, our primary goal was to increase profitability. We achieved this with operating income up 28% on a 7% sales increase. Sales of our engineered films product line rose 9% and improved an already good level of profitability. We also introduced new woven film products and test-marketed new industrial packaging materials. We worked hard on new truck topper models, enhancing superior-quality finishes and attractive designs and features to keep this product line moving forward. We improved profitability for the truck topper line as sales grew 15%, but frankly we need a great deal of further improvement to get this operation to an acceptable profit level. Our plastic tank business saw a downturn in its agricultural business in the first-half of the year, but had a good second-half recovery. Profits and sales for the full year, however, ended slightly below last year. In January 1997, we acquired Norcore Plastics, Inc. of Tacoma, Washington. The acquisition will add approximately $9 million in sales for fiscal 1998 and give Raven a much stronger presence in the industrial tank market. A REMARKABLE RECOVERY Raven's Sewn Products, or Special Apparel segment, made a remarkable recovery in fiscal 1997 with sales up 13% for the year and profits making a substantial gain. While most of our growth strategy revolves around the Plastics and Electronics business, the Sewn Products segment continues to be a significant part of making Raven a successful company. Our balance sheet remains strong with long-term debt only 5% of total capitalization. No short-term borrowings were utilized during the year and we were again able to raise our quarterly cash dividend 8% from 12 cents to 13 cents per share. We have the resources to grow both internally and by making strategic acquisitions, ones that complement our present businesses and are accretive to earnings. 15 [PHOTO] Davis A. Christensen In conclusion, I want to give credit and sincere thanks to our employees for making this past year a highly successful one. The dedication, loyalty, and commitment of our employees to producing quality products and serving our customers is an absolute must for our continuing success. /s/ David A. Christensen David A. Christensen PRESIDENT AND CHIEF EXECUTIVE OFFICER March 24, 1997 MISSION STATEMENT Raven Industries is a specialty manufacturer of plastic, electronic and sewn products. Our mission is to become a dominant factor in the niche markets we serve by meeting World Class Standards of quality, cost and service. In doing so, we increase shareholder value--a prime goal of the company--and benefit employees as well. We also will attract and retain quality employees and give them the motivation and support to succeed and grow with the company. VISION * To be recognized by employees, customers, suppliers and the communities in which we are located as a leader in product quality, customer satisfaction, employee relations and financial management. * To be a leader in key financial ratios compared to similar companies. * To have a well-trained and motivated work force at all levels of the organization. GUIDING PRINCIPLES * To strive for continuous improvement in everything we do and to focus on the quality of our products and services. * To conduct our business with integrity. * To treat our dealers and suppliers as business partners. * To treat our employees with dignity and respect and to provide a safe workplace for them. * To share our financial success with all those who contributed to it. * To have a positive social and economic impact on the communities in which we work. 16 SALES BY MARKETS
(Dollars in thousands) For the years ended January 31 1997 1996 1995 - ----------------------------------------------------------------------------------------------------- INDUSTRIAL Plastic sheeting.......................................... $ 21,276 $ 19,225 $ 16,295 Industrial tanks.......................................... 7,070 6,566 5,842 Electronics............................................... 17,754 11,391 7,488 Research balloons......................................... 3,268 2,776 2,205 Inflatables............................................... 3,515 3,169 2,414 ----------------------------------------- $ 52,883 $ 43,127 $ 34,244 RECREATION Performance outerwear..................................... $ 29,901 $ 26,426 $ 32,116 Sport balloons............................................ 2,790 2,454 2,589 ----------------------------------------- $ 32,691 $ 28,880 $ 34,705 AGRICULTURE Flow controls-precision farming........................... $ 16,689 $ 13,467 $ 10,223 Feedmill automation....................................... 3,859 4,181 3,643 Storage/sprayer tanks..................................... 8,632 9,271 7,396 Plastic sheeting.......................................... 1,255 1,653 1,315 ----------------------------------------- $ 30,435 $ 28,572 $ 22,577 AUTOMOTIVE Pickup-truck toppers...................................... $ 17,657 $ 15,402 $ 13,512 Other..................................................... 388 2,406 ----------------------------------------- $ 17,657 $ 15,790 $ 15,918 DEFENSE Electronics............................................... $ 5,559 $ 3,922 $ 10,605 Other..................................................... 216 153 3,671 ----------------------------------------- $ 5,775 $ 4,075 $ 14,276 TOTAL COMPANY SALES Industrial................................................ $ 52,883 $ 43,127 $ 34,244 Recreation................................................ 32,691 28,880 34,705 Agriculture............................................... 30,435 28,572 22,577 Automotive................................................ 17,657 15,790 15,918 ----------------------------------------- Total Commercial Sales.................................... $ 133,666 $ 116,369 $ 107,444 Defense................................................... 5,775 4,075 14,276 ----------------------------------------- Total Company Sales....................................... $ 139,441 $ 120,444 $ 121,720 =========================================
17
ELEVEN-YEAR FINANCIAL SUMMARY (Dollars in thousands, except per-share data) For the years ended January 31 1997 1996 1995 1994 1993 1992 - --------------------------------------------------------------------------------------------------------------------------------- OPERATIONS FOR YEAR: Net sales ................................. $ 139,441 $ 120,444 $ 121,720 $ 121,468 $ 111,214 $ 100,609 Gross profit .............................. 25,287 22,660 23,968 23,574 21,048 19,109 Operating income .......................... 11,971 9,561 9,136(a) 10,440 9,146 8,138 Income before income taxes ................ 11,915 9,566 9,372 10,638 9,182 8,067 Net income ................................ 7,688 6,197 6,088 6,954 6,030 5,306 Net income % of sales ..................... 5.5% 5.1% 5.0% 5.7% 5.4% 5.3% Net income % of beginning equity .......... 15.6% 13.6% 14.8% 19.6% 19.7% 20.2% Cash dividends ............................ $ 2,367 $ 2,130 $ 1,843 $ 1,545 $ 1,316 $ 1,165 FINANCIAL POSITION: Current assets ............................ $ 56,696 $ 45,695 $ 43,795 $ 45,037 $ 42,476 $ 34,798 Current liabilities ....................... 20,016 14,771 15,078 16,088 15,253 11,284 Working capital ........................... 36,680 30,924 28,717 28,949 27,223 23,514 Current ratio ............................. 2.83 3.09 2.90 2.80 2.78 3.08 Property, plant and equipment ............. 18,142 18,069 18,570 13,371 10,457 9,947 Total assets .............................. 80,662 67,553 65,636 60,597 54,813 46,528 Long-term debt ............................ 3,181 2,816 4,179 2,539 3,224 3,676 Shareholders' equity ...................... 56,729 49,151 45,526 41,100 35,530 30,601 Long-term debt/total capitalization ....... 5.3% 5.4% 8.4% 5.8% 8.3% 10.7% Inventory turnover (CGS/year-end inventory) 4.5 4.1 4.4 4.4 3.8 4.2 CASH FLOWS PROVIDED BY (USED IN): Operating activities ...................... $ 7,088 $ 9,687 $ 7,452 $ 11,257 $ 3,475 $ 7,489 Investing activities ...................... (5,090) (4,158) (10,000) (5,908) (3,107) (3,886) Financing activities ...................... (2,363) (4,029) 406 (2,042) (1,659) (2,518) Increase (decrease) in cash ............... (365) 1,500 (2,142) 3,307 (1,291) 1,085 COMMON STOCK DATA: Net income per share ...................... $ 1.61 $ 1.30 $ 1.27 $ 1.45 $ 1.27 $ 1.13 Cash dividends per share .................. 0.50 0.45 0.39 0.33 0.28 0.25 Book value per share ...................... 11.73 10.42 9.62 8.76 7.60 6.63 Stock price range during year High ................................... $ 23.50 $ 20.75 $ 24.50 $ 23.50 $ 21.50 $ 15.83 Low .................................... $ 16.00 $ 15.50 $ 18.00 $ 18.00 $ 13.83 $ 8.00 Shares outstanding, average (in thousands) 4,775 4,782 4,791 4,796 4,763 4,713 Shares outstanding, year-end (in thousands) 4,836 4,716 4,735 4,694 4,676 4,629 Number of shareholders, year-end .......... 3,011 3,190 3,031 3,173 3,147 2,775 OTHER DATA: Average number of employees ............... 1,387 1,368 1,414 1,435 1,316 1,252 Sales per employee ........................ $ 101 $ 88 $ 86 $ 85 $ 85 $ 80 Backlog ................................... $ 38,102 $ 32,539 $ 29,661 $ 36,403 $ 49,033 $ 48,200
(WIDE TABLE CONTINUED FROM ABOVE) 1991 1990 1989 1988 1987 - ------------------------------------------------------------------ $ 85,502 $ 90,973 $ 77,563 64,305 $ 52,303 17,685 18,177 14,857 14,292 12,303 7,311 7,461 5,127 4,983 4,250 7,071 6,831 4,578 4,390 3,919 4,605 4,235 2,930 2,656 2,122 5.4% 4.7% 3.8% 4.1% 4.1% 20.2% 19.7% 15.3% 15.5% 13.5% $ 1,014 $ 849 $ 732 $ 680 $ 659 $ 33,900 $ 30,570 $ 24,976 $ 21,795 $ 18,416 12,147 11,247 9,633 8,799 6,621 21,753 19,323 15,342 12,997 11,795 2.79 2.72 2.59 2.48 2.78 8,368 7,163 8,702 9,672 7,855 44,103 39,547 35,892 33,920 28,847 4,679 4,966 4,115 5,254 4,485 26,236 22,802 21,448 19,170 17,155 15.1% 17.5% 15.7% 20.9% 20.2% 3.4 4.1 4.6 4.1 3.5 $ 5,583 $ 2,404 $ 3,908 $ 4,108 $ 2,046 (3,113) (1,308) (1,331) (3,598) (4,545) (2,071) (1,875) (1,869) 274 (1,084) 399 (779) 708 784 (3,583) $ 0.98 $ 0.87 $ 0.61 $ 0.55 $ 0.45 0.22 0.18 0.15 0.14 0.14 5.77 5.01 4.48 4.03 3.63 $ 9.75 $ 10.00 $ 5.75 $ 7.09 $ 5.59 $ 6.42 $ 5.33 $ 4.37 $ 4.21 $ 3.59 4,704 4,839 4,826 4,811 4,754 4,559 4,554 4,785 4,758 4,734 2,526 1,898 1,925 2,000 1,869 1,141 1,234 1,138 1,019 864 $ 75 $ 74 $ 68 $ 63 $ 61 $ 53,587 $ 42,078 $ 33,436 $ 21,424 $ 19,808 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 5). 18 & 19 FINANCIAL REVIEW AND ANALYSIS
RESULTS OF OPERATIONS: MARGIN ANALYSIS (In thousands, except per-share data) For the years ended January 31 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- % % % % % % AMOUNT SALES CHANGE Amount Sales Change Amount Sales Change - --------------------------------------------------------------------------------------------------------------------------------- Net sales ....... $139,441 100.0 + 15.8 $120,444 100.0 - 1.0 $121,720 100.0 + 0.2 Gross profit .... 25,287 18.1 + 11.6 22,660 18.8 - 5.5 23,968 19.7 + 1.7 Beta Raven charge 1,800 1.5 Other operating expenses ..... 13,316 9.5 + 1.7 13,099 10.9 + 0.5 13,032 10.7 - 0.8 Operating income 11,971 8.6 + 25.2 9,561 7.9 + 4.7 9,136 7.5 -12.5 Income before income taxes . 11,915 8.5 + 24.6 9,566 7.9 + 2.1 9,372 7.7 -11.9 Income taxes .... 4,227 3.0 + 25.5 3,369 2.8 + 2.6 3,284 2.7 -10.9 Net income ...... 7,688 5.5 + 24.1 6,197 5.1 + 1.8 6,088 5.0 -12.5 Net income per share .... 1.61 + 23.8 1.30 + 2.4 1.27 -12.4 Average shares outstanding .. 4,775 - 0.1 4,782 - 0.2 4,791 - 0.1 Effective income tax rate ..... 35.5% + 0.9 35.2% + 0.6 35.0% + 1.2
LONG-TERM PERFORMANCE Stronger product offerings in the Electronics segment combined with improved profitability in the Plastics and Sewn Products segments to create a record year for sales and earnings. Fiscal 1997 sales of $139.4 million were 16% higher than the previous year and 15% higher than the previous record. Net income of $7.7 million, or $1.61 per share, was up 24% compared with fiscal 1996 and 11% higher than the previous record. The company returned to its longer term growth pattern in fiscal 1997. The loss of more than $20 million of annual defense revenues between fiscal 1994 and fiscal 1996 negatively affected the company's performance during the two previous fiscal years. In fiscal 1997, the company returned 15.6% on shareholders' equity, and 5.5% on sales; increased the book value of the company by 12.6%; paid a record per share dividend; invested for future growth and made a strategic acquisition in its Plastics business segment.
For the years ended January 31 1997 1996 1995 1994 1993 1992 - -------------------------------------------------------------------------------------------------------------------------------- Net income as % of Sales......................................................... 5.5% 5.1% 5.0% 5.7% 5.4% 5.3% Average assets................................................ 10.4% 9.3% 9.6% 12.1% 11.9% 11.7% Beginning equity.............................................. 15.6% 13.6% 14.8% 19.6% 19.7% 20.2%
20 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:
(Dollars in thousands) 1997 1996 1995 - ------------------------------------------------------------------------------------------------ AMOUNT % CHANGE Amount % Change Amount % Change - ------------------------------------------------------------------------------------------------ SALES Electronics .... $ 43,861 + 33.1 $ 32,962 + 3.1 $ 31,959 - 10.7 Plastics ....... 59,158 + 7.0 55,281 + 12.9 48,971 + 21.3 Sewn Products .. 36,422 + 13.1 32,201 - 21.1 40,790 - 10.0 -------- -------- -------- Total .......... $139,441 + 15.8 $120,444 - 1.0 $121,720 + 0.2 ======== ======== ======== AMOUNT % SALES Amount % Sales Amount % Sales - ------------------------------------------------------------------------------------------------ GROSS PROFITS Electronics...... $ 8,617 19.6 $ 7,841 23.8 $ 7,581 23.7 Plastics......... 10,154 17.2 9,450 17.1 9,227 18.8 Sewn Products.... 6,516 17.9 5,369 16.7 7,160 17.6 -------- -------- -------- Total............ $ 25,287 18.1 $ 22,660 18.8 $ 23,968 19.7 ======== ======== ========
ELECTRONICS SEGMENT FISCAL 1997 VERSUS FISCAL 1996 The company successfully broadened its commercial contract electronics offerings in fiscal 1997. Revenues from contract electronics manufacturing in the Raven Electronic Systems division doubled over fiscal 1996 levels and reached $18.0 million. Sales of flow and position control devices for precision farming applications increased from $13.5 to $16.7 million. Lower contract manufacturing revenues from the company's Beta Raven subsidiary partially offset these increases. The lower gross profit rate in fiscal 1997 was a result of the high rate of technological and customer start-up costs incurred with the introduction of new products and transformation from defense orientation to a commercial customer base. ELECTRONICS SEGMENT (Dollars in millions) [BAR CHART] GROSS YEAR SALES PROFITS '95 31.959 7.581 '96 32.962 7.841 '97 43.861 8.617 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 because 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 relatively higher sales of agricultural electronics. 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. 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 Sales are expected to continue to grow between 15-20% in this segment in the coming fiscal year. Gross profit rates are expected to improve slightly as the impact of start-up costs are lessened by a higher percentage of repeat business. Timely delivery of quality products under commercial contracts during the first half of the year is crucial to obtaining additional orders and meeting the established goals for this segment. 21 PLASTICS SEGMENT FISCAL 1997 VERSUS FISCAL 1996 Continued growth in sales of engineered films in fiscal 1997 was central to the company's success in this business segment. Engineered film sales were $25.8 million, up 9% over fiscal 1996. Fiscal 1996 sales included emergency demand for hurricane film. Sales of high-altitude research balloons and pickup-truck toppers increased by 18% and 15%, respectively. Weakness in agricultural markets reduced sales of plastic tanks by 4%. Higher sales combined with improved operations in the second year of production at the company's pickup-truck topper plant increased gross profits in fiscal 1997, compared with fiscal 1996. PLASTICS SEGMENT (Dollars in millions) [BAR CHART] GROSS YEAR SALES PROFITS '95 48.971 9.227 '96 55.281 9.450 '97 59.158 10.154 FISCAL 1996 VERSUS FISCAL 1995 Sales of engineered films increased 20% in fiscal 1996 and totaled $23.6 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 its utility-truck body business and related assets. This sale had no material impact on the financial statements. PROSPECTS The addition of Norcore Plastics products to this segment is expected to increase sales by nearly $9 million in fiscal 1998. Total sales in the Plastics segment are expected to grow by more than 25% over fiscal 1997 levels. Success will depend on successful integration of Norcore Plastics into the company's marketing and manufacturing strategies. Gross profit rates are expected to decline somewhat as the costs of integration are incurred. SEWN PRODUCTS SEGMENT FISCAL 1997 VERSUS FISCAL 1996 Sales of $36.4 million in fiscal 1997 were 13% higher than in fiscal 1996 as a result of improved market conditions for outerwear sales to catalog merchandisers and increased sales of severe weather uniforms. Sales of inflatable display products and hot-air balloons also increased. Raven branded skiwear and western wear sales continued to decline. Higher sales and production levels improved plant efficiencies and aided the recovery of the gross profit rate. 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 with 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. SEWN PRODUCTS SEGMENT (Dollars in millions) [BAR CHART] GROSS YEAR SALES PROFITS '95 40.790 7.160 '96 32.201 5.369 '97 36.422 6.516 PROSPECTS Sales are expected to stay relatively flat in this segment. Management believes that a less aggressive strategy in its Sewn Products businesses will improve consistency and predictability of profits. As a result, gross profits are also expected to stay relatively stable. Management believes these businesses do have sufficient resources to respond to opportunities as they arise. EXPENSES, INCOME TAXES AND OTHER FISCAL 1997 VERSUS FISCAL 1996 Selling and administrative costs increased by 1.7% over fiscal 1996 levels. As a percent of sales they were reduced to 9.5% from 10.9% one year earlier. Selling expenses did not increase over the prior year as a result of declines in commissionable sales and lower promotional expenses. 22 Administrative expenses did increase by 3.9% as a result of higher compensation expenses. Interest expense declined due to lower borrowing levels. The company's effective income tax rate increased from 35.2% in fiscal 1996 to 35.5% in fiscal 1997 due primarily to the taxation of income over $10 million at a higher federal rate. FISCAL 1996 VERSUS FISCAL 1995 Selling and administrative costs were essentially unchanged, both as a percent of sales and in spending levels. Higher selling costs in support of precision farming and due to higher commissionable sales were offset by administrative cost reductions. 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. PROSPECTS Operating expenses are expected to remain relatively constant as a percentage of sales in fiscal 1998. Interest costs are projected to remain level as positive cash flow from operations is expected to offset increased capital expenditures and working capital requirements in the coming year. The company's effective income tax rate is expected to rise to the 36% range as the goodwill amortization associated with the Norcore acquisition will not be deductible for federal income tax purposes. 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) 1997 1996 1995 - ------------------------------------------------------------------ Operating activities....... $ 7,088 $ 9,687 $ 7,452 Investing activities....... (5,090) (4,158) (10,000) Financing activities....... (2,363) (4,029) 406 Increase (decrease) in cash................. $ (365) $ 1,500 $ (2,142) OPERATING ACTIVITIES The company's cash flow from operations totaled $24.2 million over the past three years, compared with net income of $20.0 million over the same period. Accounts receivable, net of the impact of the Norcore acquisition, increased by $8.1 million in fiscal 1997, due primarily to a 29% increase in fourth quarter shipments over the prior year. Inventory levels were flat and higher accounts payable and accrued expenses offset some of the impact of higher accounts receivable levels. Working capital requirements are projected to grow along with revenues in fiscal 1998. INVESTING ACTIVITIES The company acquired Norcore Plastics, Inc. in January 1997, acquiring all of its capital stock for $1.1 million in cash and 93,701 shares of Raven common stock. Capital expenditures totaled $4.0 million in fiscal 1997, approximately the same level as the prior year and slightly less than depreciation and amortization. Capital expenditures are expected to exceed depreciation and amortization by approximately $2 million in fiscal 1998. Over one-half the expenditures in fiscal 1997 and projected for fiscal 1998 are in support of continued growth in the Plastics segment. FINANCING ACTIVITIES AND CREDIT LINES The company increased its dividend, on a per share basis, for the tenth consecutive year. Cash required for the Norcore acquisition and to refinance debt assumed in the merger was obtained, in part, by borrowing $1.5 million under a long-term note. The company's cash position was strong throughout the year and use of the short-term credit facility was not required. Maximum borrowings under the company's line of credit were $1.5 million during fiscal 1996. Management believes the company's $5.0 million line of credit will only be required for seasonal short-term financing during fiscal 1998. CAPITAL STRUCTURE AND LONG-TERM FINANCING The company's long-term debt to total capitalization ratio was 5.3% at January 31, 1997 compared with 5.4% 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 8.25%, the weighted average interest rate of the company's debt was 7.8% at January 31, 1997. No new long-term borrowing is planned for fiscal 1998. 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 opportunities in its core businesses with emphasis on those that build on the company's strengths of customer service and quality manufacturing. 23 WEEKLY STOCK PRICE, VOLUME AND P/E--FISCAL 1997 [BAR AND LINE CHART] DATE STOCK PRICE VOLUME P/E FEB 2/02 18 14500.0 13.846 2/09 17 3/4 7400.00 13.654 2/16 17 3/4 21600.0 13.654 2/23 17 64700.0 13.077 MAR 3/01 16 1/2 109300 12.692 3/08 16 1/4 22300.0 12.500 3/15 16 7/8 33000.0 12.981 3/22 16 1/4 17900.0 12.500 3/29 17 1/2 8600.00 13.462 APR 4/05 16 17300.0 12.308 4/12 17 40900.0 13.077 4/19 L 16 49400.0 L 12.308 4/26 16 3/4 41400.0 12.885 MAY 5/03 17 5/8 21700.0 12.960 5/10 17 1/2 16900.0 12.868 5/17 17 3/4 21300.0 13.051 5/24 18 5/8 13400.0 13.695 5/31 19 3/4 17800.0 14.522 JUN 6/07 20 1/2 56700.0 15.074 6/14 20 1/2 2500.00 15.074 6/21 20 1/2 19900.0 15.074 6/28 20 1/4 6100.00 14.890 JUL 7/05 20 1/4 2200.00 14.890 7/12 20 6900.00 14.706 7/19 19 1/4 13900.0 14.154 7/26 18 5/8 28400.0 13.695 AUG 8/02 18 1/2 42200.0 12.937 8/09 19 5400.00 13.287 8/16 21 3/4 103700 15.210 8/23 22 72900.0 15.385 8/30 22 3/4 47200.0 H 15.909 SEP 9/06 21 7/8 3400.00 15.297 9/13 22 1/8 18100.0 15.472 9/20 21 5/8 40600.0 15.122 9/27 20 3/4 76200.0 14.510 OCT 10/04 21 1/4 51600.0 14.860 10/11 22 1/2 63000.0 15.734 10/18 21 3/4 17500.0 15.210 10/25 21 3/4 63400.0 15.210 NOV 11/01 22 1/4 27700.0 14.833 11/08 21 5/8 40700.0 14.417 11/15 20 7/8 15900.0 13.917 11/22 21 1/2 66000.0 14.333 11/29 21 6000.00 14.000 DEC 12/06 21 3/8 30000.0 14.250 12/13 22 7000.00 14.667 12/20 22 19100.0 14.667 12/27 21 3/4 3700.00 14.500 JAN 1/03 21 3/4 23600.0 14.500 1/10 22 3/8 16400.0 15.167 1/17 22 1/2 14300.0 15.000 1/24 H 23 1/2 13700.0 15.667 1/31 22 1/2 900.00 15.000 QUARTERLY SUMMARY (UNAUDITED)
Common stock market price (Dollars in thousands, Net Gross Operating Pretax Net Net income ------------------- Dividends except per share data) sales profit income income income per share High Low per share - ---------------------------------------------------------------------------------------------------------------------------------- FISCAL 1997 First Quarter............ $ 30,875 $ 6,086 $ 2,826 $ 2,797 $ 1,808 $ 0.38 $ 18.75 $ 16.00 $ 0.120 Second Quarter........... 31,270 5,398 2,215 2,191 1,409 0.30 22.00 16.00 0.120 Third Quarter............ 38,943 7,055 3,598 3,571 2,303 0.48 22.75 18.25 0.130 Fourth Quarter........... 38,353 6,748 3,332 3,356 2,168 0.45 23.50 20.88 0.130 --------- --------- -------- -------- -------- --------- ------- Total Year............... $ 139,441 $ 25,287 $ 11,971 $ 11,915 $ 7,688 $ 1.61 $ 23.50 $ 16.00 $ 0.500 ========= ========= ======== ======== ======== ========= ======= 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 ========= ========= ======== ======== ======== ========= =======
(a) Includes the $1.8 million Beta Raven charge (See Note 5). 24
CONSOLIDATED BALANCE SHEETS (Dollars in thousands) As of January 31 1997 1996 1995 - -------------------------------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents ....................................... $ 3,439 $ 3,804 $ 2,304 Accounts receivable ............................................. 25,637 16,002 17,592 Inventories ..................................................... 25,125 23,897 22,103 Prepaid expenses and other current assets ....................... 431 413 382 Deferred income taxes ........................................... 2,064 1,579 1,414 ------- ------- ------- Total current assets ......................................... 56,696 45,695 43,795 Property, plant and equipment, net ................................. 18,142 18,069 18,570 Other assets, net .................................................. 5,824 3,789 3,271 ------- ------- ------- Total assets ................................................. $80,662 $67,553 $65,636 ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current portion of long-term debt ............................... $ 1,366 $ 813 $ 907 Accounts payable ................................................ 7,849 4,651 5,435 Accrued liabilities ............................................. 10,197 8,309 8,191 Customer advances ............................................... 604 998 545 ------- ------- ------- Total current liabilities .................................... 20,016 14,771 15,078 Long-term debt, less current portion ............................... 3,181 2,816 4,179 Deferred income taxes .............................................. 736 815 853 Stockholders' equity ............................................... 56,729 49,151 45,526 ------- ------- ------- Common shares Authorized--100,000,000 Outstanding--1997: 4,835,558; 1996: 4,715,976; 1995: 4,734,530 Total liabilities and stockholders' equity ...................... $80,662 $67,553 $65,636 ======= ======= =======
The accompanying notes are an integral part of the financial statements. 25
CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per-share data) For the years ended January 31 1997 1996 1995 - --------------------------------------------------------------------------------------------------- Net sales ............................................. $ 139,441 $ 120,444 $ 121,720 Cost of goods sold .................................... 114,154 97,784 97,752 ----------- ----------- ----------- Gross profit ....................................... 25,287 22,660 23,968 Operating expenses Selling ............................................ 7,211 7,223 7,075 Administrative ..................................... 6,105 5,876 5,957 Beta Raven charge .................................. 1,800 ----------- ----------- ----------- Operating income ................................ 11,971 9,561 9,136 ----------- ----------- ----------- Interest expense ...................................... (310) (375) (323) Other income, net ..................................... 254 380 559 ----------- ----------- ----------- Income before income taxes ......................... 11,915 9,566 9,372 ----------- ----------- ----------- Income taxes .......................................... 4,227 3,369 3,284 ----------- ----------- ----------- Net income ......................................... $ 7,688 $ 6,197 $ 6,088 =========== =========== =========== Net income per common and common-equivalent share ..... $ 1.61 $ 1.30 $ 1.27 =========== =========== =========== Average common and common-equivalent shares outstanding 4,775,160 4,782,185 4,791,083 =========== =========== ===========
The accompanying notes are an integral part of the financial statements. 26
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY $1 Par Treasury stock common Paid-in ----------------------- Retained (Dollars in thousands, except per-share data) stock capital Shares At cost earnings Total - ---------------------------------------------------------------------------------------------------------------------------------- Balance, January 31, 1994..................... $ 5,010 $ 279 (315,903) $ (2,334) $ 38,145 $ 41,100 Net income.................................... 6,088 6,088 Cash dividends ($.39 per share)............... (1,843) (1,843) Purchase and retirement of stock.............. (35) (730) (765) Employees' stock options exercised............ 75 494 569 Tax benefit from exercise of stock options........................... 377 377 ------- ------- -------- -------- -------- -------- Balance January 31, 1995...................... 5,050 420 (315,903) (2,334) 42,390 45,526 Net income.................................... 6,197 6,197 Cash dividends ($.45 per share)............... (2,130) (2,130) Purchase of treasury stock.................... (36,500) (576) (576) Purchase and retirement of stock.............. (9) (172) (181) Employees' stock options exercised............ 27 180 207 Tax benefit from exercise of stock options........................... 108 108 ------- ------- -------- -------- -------- -------- Balance January 31, 1996...................... 5,068 536 (352,403) (2,910) 46,457 49,151 Net income.................................... 7,688 7,688 Cash dividends ($.50 per share)............... (2,367) (2,367) Shares issued for acquisition................. 94 1,956 2,050 Purchase and retirement of stock.............. (30) (624) (654) Employees' stock options exercised............ 56 618 674 Tax benefit from exercise of stock options........................... 187 187 ------- ------- -------- -------- -------- -------- Balance January 31, 1997...................... $ 5,188 $ 2,673 (352,403) $ (2,910) $ 51,778 $ 56,729 ======= ======= ======== ======== ======== ========
The accompanying notes are an integral part of the financial statements. 27
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) For the years ended January 31 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------- Cash flows from operating activities Net income .......................................................... $ 7,688 $ 6,197 $ 6,088 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................................. 4,566 4,242 3,582 Provision for losses on accounts receivable ................... 88 86 135 Deferred income taxes ......................................... (514) (203) (29) Equity in earnings of affiliate, net of dividends ............. (6) (105) (180) Change in operating assets and liabilities, net of effects from acquisition of businesses ..................... (4,808) (525) (2,110) Other operating activities, net ............................... 74 (5) (34) ------- ------- -------- Net cash provided by operating activities ........................... 7,088 9,687 7,452 Cash flows from investing activities Capital expenditures ................................................ (4,009) (4,186) (7,753) Acquisition of businesses ........................................... (1,105) (510) (2,372) Other investing activities, net ..................................... 24 538 125 ------- ------- -------- Net cash used in investing activities ............................... (5,090) (4,158) (10,000) Cash flows from financing activities Issuance of short-term debt ......................................... 4,500 7,500 Payment of short-term debt .......................................... (4,500) (7,500) Retire debt of acquired business .................................... (890) Long-term debt principal payments ................................... (813) (1,457) (804) Proceeds from issuance of long-term debt ............................ 1,500 2,872 Net proceeds from exercise of stock options ......................... 207 134 181 Dividends paid ...................................................... (2,367) (2,130) (1,843) Purchase of treasury stock .......................................... (576) ------- ------- -------- Net cash provided by (used in) financing activities ................. (2,363) (4,029) 406 ------- ------- -------- Net increase (decrease) in cash and cash equivalents ................... (365) 1,500 (2,142) Cash and cash equivalents at beginning of year ......................... 3,804 2,304 4,446 ------- ------- -------- Cash and cash equivalents at end of year ............................... $ 3,439 $ 3,804 $ 2,304 ======= ======= ========
The accompanying notes are an integral part of the financial statements. 28 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. Actual results could differ from these estimates. 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 Advantage 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 operations when it is probable that an asset has been impaired or a liability incurred and the amount of the loss can be reasonably estimated. RESEARCH AND DEVELOPMENT: Research and development expenditures of $678,000 in fiscal 1997, $619,000 in fiscal 1996, and $955,000 in fiscal 1995 were charged to cost of goods sold in the year incurred. STOCK OPTIONS: The company records compensation expense related to its stock option plan using the intrinsic value method. 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. Deferred tax assets are reduced by a valuation allowance to reflect realizable value, when necessary. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities. 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. 29 NOTE 2 SELECTED BALANCE SHEET INFORMATION Following are the components of selected balance sheet items:
(Dollars in thousands) As of January 31 1997 1996 1995 - ---------------------------------------------------------------------------------- Accounts receivable: Trade accounts ....................... $ 25,977 $ 16,342 $ 17,942 Allowance for doubtful accounts ...... (340) (340) (350) -------- -------- -------- Total ............................. $ 25,637 $ 16,002 $ 17,592 ======== ======== ======== Inventories: Finished goods ....................... $ 4,275 $ 5,236 $ 4,247 In process ........................... 4,574 5,344 4,709 Materials ............................ 16,276 13,317 13,147 -------- -------- -------- Total ............................. $ 25,125 $ 23,897 $ 22,103 ======== ======== ======== Property, plant, and equipment: Land ................................. $ 1,185 $ 1,185 $ 1,129 Building and improvements ............ 13,988 13,285 13,253 Machinery and equipment .............. 33,142 30,550 28,726 -------- -------- -------- 48,315 45,020 43,108 Accumulated depreciation ............. (30,173) (26,951) (24,538) -------- -------- -------- Total ............................. $ 18,142 $ 18,069 $ 18,570 ======== ======== ======== Other assets: Intangible assets, net of amortization $ 3,732 $ 1,746 $ 1,474 Investment in affiliate .............. 1,802 1,796 1,691 Other non-current assets ............. 290 247 106 -------- -------- -------- Total ............................. $ 5,824 $ 3,789 $ 3,271 ======== ======== ======== Accrued liabilities: Profit sharing ....................... $ 1,654 $ 1,324 $ 1,557 Vacations ............................ 1,786 1,622 1,573 Salaries and wages ................... 2,514 2,427 2,121 Insurance obligations ................ 2,070 1,502 1,405 Other ................................ 2,173 1,434 1,535 -------- -------- -------- Total ............................. $ 10,197 $ 8,309 $ 8,191 ======== ======== ========
30 NOTE 3 SUPPLEMENTAL CASH FLOW INFORMATION
(Dollars in thousands) For the years ended January 31 1997 1996 1995 - ----------------------------------------------------------------------------------- Changes in operating assets and liabilities: Accounts receivable ........................ $(8,112) $ 1,504 $(1,187) Inventories ................................ (393) (1,785) 497 Prepaid expenses and other current assets .. 53 (31) 42 Accounts payable ........................... 2,450 (784) (467) Accrued liabilities ........................ 1,588 118 (397) Customer advances .......................... (394) 453 (598) ------- ------- ------- $(4,808) $ (525) $(2,110) ======= ======= ======= Cash paid during the year for: Interest ................................... $ 309 $ 395 $ 318 Income taxes ............................... 4,201 3,761 2,733
NOTE 4 ACQUISITIONS In January 1997, the company acquired all the outstanding shares of Norcore Plastics, Inc., a manufacturer of large industrial storage tanks utilizing "dual laminate" technology. Consideration paid included $1.1 million of cash and the issuance of 93,701 shares of unregistered common stock. Raven acquired assets of $3.0 million and assumed liabilities of $2.1 million in connection with the merger. A five-year real property lease commitment with the former owners for approximately $120,000 annually was also assumed by the company. In fiscal 1996 and fiscal 1995, the company acquired certain assets of several different companies for $510,000 and $2.4 million, respectively. All of the acquisitions were accounted for as purchases. The cost in excess of net tangible assets acquired resulted in goodwill of $3.6 million. The consolidated financial statements include the results of operations of these businesses subsequent to the acquisition dates. NOTE 5 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. 31 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 on page 2, 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. No other customer accounted for more than 10% of consolidated sales in any fiscal year presented. NOTE 7 QUARTERLY DATA (UNAUDITED) Quarterly net sales, gross profit, net income and net income per share data are presented on page 24. NOTE 8 FINANCING ARRANGEMENTS Long-term debt consisted of the following:
(Dollars in thousands) As of January 31 1997 1996 1995 - -------------------------------------------------------------------------------------------- Norwest bank notes payable in installments through 2001 with interest at the prime rate ...... $ 3,620 $ 2,680 $ 3,540 Contracts, notes and mortgages payable in installments through 2003 with interest from 3.0% to 14.0% ..... 762 740 1,293 Industrial revenue bonds payable in installments through 2001 with interest at 83% of the prime rate 165 209 253 ------- ------- ------- Total long-term debt ........................... 4,547 3,629 5,086 Current portion ................................ (1,366) (813) (907) ------- ------- ------- $ 3,181 $ 2,816 $ 4,179 ======= ======= =======
Certain long-term debt is collateralized by land, buildings and equipment having an aggregate depreciated cost at January 31, 1997 of $2.0 million. Norwest Bank South Dakota, N.A. (Norwest) provides the company's unsecured notes payable 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, 1997 are as follows: (Dollars in thousands) year ending January 31 - ---------------------------------------------------------------- 1998...................................... $ 1,366 1999...................................... 2,054 2000...................................... 559 2001...................................... 544 2002...................................... 12 Thereafter................................ 12 ------- Total.................................. $ 4,547 ======= 32 The company had a $5.0 million unsecured line of credit available as of January 31, 1997; 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, 1997, 1996, and 1995 were 8.25%, 8.5%, and 8.5%, respectively. In fiscal 1997, there were no borrowings under the credit line. The weighted average interest rates under short-term credit lines in fiscal 1996 and 1995 were 8.9% and 7.6%, respectively. NOTE 9 SHARE PURCHASE 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. NOTE 10 STOCK OPTIONS Officers and key employees of the company have been granted options to purchase stock under the 1990 Stock Option Plan. 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. The plan reserves 177,200 shares of the company's common stock at January 31, 1997. Options have been granted at prices not less than market value at the date of grant, vest over a four-year period and expire after five years. Compensation expense related to the cash bonus was $343,000 in fiscal 1997 and $298,000 in fiscal 1996. In accordance with Statement of Financial Standards No. 123 the company has elected to continue to use the intrinsic value method to recognize compensation expense for stock options. If compensation expense had been recognized in fiscal 1996 and 1997 in accordance with the fair value method, the company's net income and net income per share would have been: For the years ended January 31 1997 1996 - -------------------------------------------------------------------------------- AS REPORTED PRO FORMA As reported Pro forma - -------------------------------------------------------------------------------- Net income (in thousands)....... $ 7,688 $ 7,573 $ 6,197 $ 6,172 Net income per share............ $ 1.61 $ 1.59 $ 1.30 $ 1.29 The pro forma information above only includes stock options granted in fiscal 1996 and 1997. Pro forma compensation expense under the fair value method will increase over the next few years as additional option grants are considered. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: Dividend yield of 2.5-2.7%; expected volatility of 25%; risk-free interest rate of 5.8%; and expected lives of 4.5 years. The fair value of each option granted, including the cash bonus, was $7.30 in fiscal 1996 and $8.75 in fiscal 1997. 33 Information regarding option activity follows:
For the years ended January 31 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price - ----------------------------------------------------------------------------------------------------------------------- Outstanding at beginning of year............... 280,292 $ 16.50 247,581 $ 15.17 270,080 $ 12.40 Granted ...................................... 65,100 21.00 60,000 17.87 59,400 18.25 Exercised...................................... (55,642) 12.11 (27,289) 7.57 (74,812) 7.60 Forfeited...................................... (2,000) 18.51 (7,087) 15.60 ------- ------- ------- Outstanding at end of year..................... 287,750 $ 18.35 280,292 $ 16.50 247,581 $ 15.17 ======= ======= ======= Options exercisable at year-end................ 135,400 $ 17.05 134,329 $ 14.65 105,411 $ 12.32
The following table contains information about stock options outstanding at January 31, 1997: Remaining Exercise Contractual Number Number Price Life (Years) Outstanding Exercisable - ------------------------------------------------------------------ $13.87 0.75 50,850 50,850 20.00 1.75 53,900 40,425 18.25 2.75 58,600 29,300 17.87 3.75 59,300 14,825 21.00 4.75 65,100 -- ------- ------- 287,750 135,400 ======= ======= NOTE 11 EMPLOYEE RETIREMENT PLAN The company has a profit sharing plan covering substantially all employees. Contributions to the profit sharing plan, not to exceed 15% of total eligible compensation, are made by Raven and each subsidiary, at the discretion of each entity's Board of Directors. The company's contribution to the plan was $1,654,000, $1,324,000, and $1,557,000 for fiscal 1997, 1996 and 1995, respectively. 34 NOTE 12 INCOME TAXES Significant components of the company's income tax provision are as follows: (Dollars in thousands) For the years ended January 31 1997 1996 1995 - ------------------------------------------------------------------------------ Income taxes Currently payable......................... $ 4,741 $ 3,572 $ 3,313 Deferred benefit.......................... (514) (203) (29) ------- ------- ------- $ 4,227 $ 3,369 $ 3,284 ======= ======= ======= Significant components of the company's deferred tax assets and liabilities are as follows: (Dollars in thousands) As of January 31 1997 1996 1995 - ----------------------------------------------------------------------------- Deferred tax assets: Allowance for doubtful accounts ......... $ 119 $ 119 $ 122 Inventory valuation methods ............. 256 107 99 Accrued vacations ....................... 478 429 416 Insurance obligations ................... 718 491 441 Other accrued liabilities ............... 493 433 336 ------ ------ ------ Total ................................ 2,064 1,579 1,414 ------ ------ ------ Deferred tax liabilities: Carrying value of investment in affiliate 626 622 588 Depreciation methods .................... 76 83 90 Safe-harbor leases ...................... 34 110 175 ------ ------ ------ Total ................................ 736 815 853 ------ ------ ------ Net deferred tax asset ..................... $1,328 $ 764 $ 561 ====== ====== ====== The company's effective tax rate was 35.5%, 35.2%, and 35.0%, in fiscal 1997, 1996, and 1995, 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. 35 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, 1997, 1996, and 1995, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended January 31,1997. 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, 1997, 1996, and 1995 and the consolidated results of their operations and their cash flows for each of the three years in the period ended January 31, 1997, in conformity with generally accepted accounting principles. /s/ COOPERS & LYBRAND L.L.P. Minneapolis, Minnesota March 12, 1997 36 INVESTOR INFORMATION DIRECTORS CONRAD J. HOIGAARD(2,3) Chairman of the Board Raven Industries, Inc. Chairman of the Board Hoigaard's Inc. Minneapolis, MN Age: 60 DAVID A. CHRISTENSEN(3) President & Chief Executive Officer Raven Industries, Inc. Sioux Falls, SD Age: 62 ANTHONY W. BOUR(1) Former President Starmark, Inc. Sioux Falls, SD Age: 59 MARK E. GRIFFIN(2) President & Chief Executive Officer Lewis Drugs, Inc. Sioux Falls, SD Age:46 KEVIN T. KIRBY(1) President Kirby Investment Corp. Sioux Falls, SD Age: 42 JOHN C. SKOGLUND(2,3) Chairman Skoglund Communications Duluth, MN Chairman Minnesota Vikings Minneapolis, MN Age: 64 THOMAS S. EVERIST(1) President L.G. Everist Sioux Falls, SD Age: 47 (1) Audit Committee (2) Compensation Committee (3) Executive Committee INDEPENDENT ACCOUNTANTS Coopers & Lybrand L.L.P. Minneapolis, MN OFFICERS DAVID A. CHRISTENSEN President & Chief Executive Officer Age: 62 * Service: 34 years GARY L. CONRADI Vice President Corporate Services Age: 57 * Service:30 years RONALD M. MOQUIST Executive Vice President Age: 51 * Service: 21 years ARNOLD J. THUE Vice President, Finance Secretary & Treasurer Age: 58 * Service: 29 years 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 FORM 10-K Upon written request, Raven Industries, Inc.'s Form 10-K for the fiscal year ended January 31, 1997, 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 STOCK QUOTATIONS Nasdaq Ticker Symbol--RAVN ANNUAL MEETING May 22, 1997 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. RAVEN INDUSTRIES PO Box 5107 * Sioux Falls, SD 57117-9878 EX-21 4 SUBSIDIARIES OF THE REGISTRANT EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Name of Subsidiary State of Incorporation ------------------ ---------------------- Aerostar International, Inc. South Dakota Beta Raven Inc. Missouri Glasstite, Inc. Minnesota EX-23 5 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement of Raven Industries, Inc. on Form S-8 (Registration No. 33-38614) of our reports dated March 12, 1997, on our audits of the consolidated financial statements and financial statement schedule of Raven Industries, Inc. as of January 31, 1997, 1996 and 1995, and for the years ended January 31, 1997, 1996 and 1995, which reports are included or incorporated by reference in this Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. Minneapolis, Minnesota April 25, 1997 EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS JAN-31-1997 JAN-31-1997 3,439 0 25,977 340 25,125 56,696 48,315 30,173 80,662 20,016 3,181 0 0 5,188 51,541 80,662 139,441 139,441 114,154 114,154 0 0 310 11,915 4,227 7,688 0 0 0 7,688 1.61 1.61
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