Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed effectiveness of the Company's internal control over financial reporting as of January 31, 2020. In making this assessment of effectiveness of internal control over financial reporting, management excluded from this assessment the internal control over financial reporting at Dot Technology Corp., of which a majority ownership was acquired on November 13, 2019. The total assets and operating income of Dot Technology Corp. represent approximately 2% and (4%), respectively, of the Company's related consolidated financial statement amounts as of and for the year ended January 31, 2020.

In making its assessment of effectiveness of internal control over financial reporting, management used the criteria described by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on this assessment using those criteria, we concluded that, as of January 31, ~~2019,~~2020, the Company's internal control over financial reporting was effective at a reasonable assurance level.

The effectiveness of our internal control over financial reporting as of January 31, ~~2019~~2020, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which appears on the next page.



/s/ DANIEL A. RYKHUS						/s/ STEVEN E. BRAZONES
Daniel A. Rykhus						Steven E. Brazones
President and Chief Executive Officer						Vice President and Chief Financial Officer

~~March 22, 2019~~

March 26, 2020

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors ~~and Shareholders~~ of Raven Industries, Inc.

~~Opinions~~

Opinion on the Financial Statements ~~and Internal Control over Financial Reporting~~

We have audited the accompanying consolidated balance sheets of Raven Industries, Inc. and subsidiaries (the "Company") as of January 31, ~~2019~~2020 and ~~2018,~~2019, the related consolidated statements of income and comprehensive income, ~~consolidated statements of shareholders’~~shareholders' equity, ~~consolidated statements of~~and cash flows, for each of the ~~two~~three years in the period ended January 31, ~~2019,~~2020, and the related notes and the ~~schedules~~schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of January 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2020 and 2019, and ~~2018~~ the results of its operations and its cash flows for each of the ~~two~~three years in the period ended January 31, ~~2019,~~2020, in conformity with accounting principles generally accepted in the United States of America. ~~Also,~~

We have also audited, in ~~our opinion,~~accordance with the standards of the Public Company ~~maintained, in all material respects, effective~~Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, ~~2019,~~2020, based on criteria established in Internal Control -— Integrated Framework (2013) issued by ~~COSO.~~

~~Basis for Opinions~~

~~The Company’s management is responsible for these financial statements, for maintaining effective~~the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 26, 2020, expressed an unqualified opinion on the Company's internal control over financial ~~reporting, and~~reporting.

Basis for ~~its assessment~~Opinion

These financial statements are the responsibility of the ~~effectiveness of internal control over financial reporting, included in the accompanying managements report on internal control over financial reporting.~~Company's management. Our responsibility is to express an opinion on ~~these~~the Company's financial statements ~~and an opinion on the Company’s internal control over financial reporting~~ based on our audits. We are a public accounting firm registered with the ~~Public Company Accounting Oversight Board (United States) (PCAOB)~~PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the ~~audits~~audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or ~~fraud, and whether effective internal control over financial reporting was maintained in all material respects.~~

fraud. Our audits ~~of the financial statements~~ included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures tothat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Acquisitions and Investments in Businesses and Technologies — In-Process Research and Development Intangible Assets — Refer to Notes 1 and 6

Critical Audit Matter Description

The Company completed the acquisition of Smart Ag, Inc. and a majority ownership in Dot Technology Corp. (“DOT”) for an aggregate purchase price of approximately $54 million during fiscal 2020. The Company accounted for the acquisitions of these businesses using the acquisition method of accounting. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including intangible assets of approximately $31 million for in-process research and development (“IPR&D”). Management estimated the fair value of the IPR&D intangible asset using the multi-period excess earnings method. The fair value determination of the IPR&D intangible asset required management to make significant estimates and assumptions related to the selection of the discount rate and the amount and timing of future cash flows, including expected growth rates, product obsolescence factors, and profitability.

Given the significance of the DOT IPR&D intangible asset and given the fair value determination of the DOT IPR&D intangible asset requires management to make significant estimates and assumptions related to the selection of the discount rate and the amount and timing of future cash flows, including expected growth rates, product obsolescence factors and profitability, performing audit procedures to evaluate the reasonableness of these estimates and assumptions for the DOT IPR&D intangible

asset required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s judgments regarding the selection of the discount rate and the amount and timing of future cash flows, including expected growth rates, product obsolescence factors, and profitability for the DOT IPR&D intangible asset included the following, among others:

•We tested the effectiveness of controls over the valuation of the IPR&D intangible asset, including management’s controls over the selection of the discount rate and forecasts of expected growth rates, product obsolescence factors, and profitability.

•We evaluated the reasonableness of management’s forecasts of expected growth rates, product obsolescence factors, and profitability by evaluating the source information and assumptions used by management and by comparing the projections to (1) internal communications to management and the Board of Directors, (2) management’s estimates of market demand including consideration of external market sources, (3) historical order and cost activity, and (4) external information on obsolescence factors of similar assets.

•With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by:

–Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation.

–Developing a range of independent estimates and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

March 26, 2020

We have served as the Company's auditor since 2017.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Raven Industries, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Raven Industries, Inc. and subsidiaries (the “Company”) as of January 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 31, 2020, of the Company and our report dated March 26, 2020, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Dot Technology Corp., of which a majority ownership was acquired on November 13, 2019, and whose financial statements constitute approximately 2% of total assets and (4%) of operating income of the consolidated financial statement amounts as of and for the year ended January 31, 2020. Accordingly, our audit did not include the internal control over financial reporting at Dot Technology Corp.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, ~~and~~ testing and evaluating the design and operating effectiveness of internal control based on the assessed ~~risk. Our audits also included~~risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our ~~audits provide~~audit provides a reasonable basis for our ~~opinions.~~opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

/s/ Deloitte & Touche LLP

Minneapolis, Minnesota

March ~~22, 2019~~26, 2020

~~We have served as the Company's auditor since 2017.~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the Board of Directors and Shareholders of Raven Industries, Inc.~~

In our opinion, the consolidated statements of income and comprehensive income, shareholder’s equity and cash flows for the year ended January 31, 2017 present fairly, in all material respects, the results of operations and cash flows of Raven Industries, Inc. and its subsidiaries for the year ended January 31, 2017, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the year ended January 31 2017 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

~~/s/ PricewaterhouseCoopers LLP~~

~~Minneapolis, Minnesota~~

~~March 31, 2017~~



RAVEN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands, except per-share amounts)


	As of January 31,
	2020		2019
ASSETS
Current assets
Cash and cash equivalents	$	20,707	$	65,787

Accounts receivable, net	62,552		54,472
Inventories, net	53,899		54,076
Other current assets	5,436		8,736
Total current assets	142,594		183,071

Property, plant and equipment, net	100,850		106,615
Goodwill	106,509		50,942
Intangible assets, net	46,217		16,293
Other assets	7,087		3,324
TOTAL ASSETS	$	403,257	$	360,245

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	14,893	$	8,272
Accrued liabilities	20,743		23,478
Other current liabilities	2,287		1,303
Total current liabilities	37,923		33,053

Long-term borrowings	225		—
Other liabilities	29,161		18,235
Total liabilities	67,309		51,288

Commitments and contingencies (see Note 13)
Redeemable noncontrolling interest	21,302		—

Raven Industries, Inc. shareholders' equity
Common stock, $1.00 par value, authorized shares 100,000; issued 67,436 and 67,289 respectively	67,436		67,289
Paid-in capital	61,508		59,655
Retained earnings	302,300		285,969
Accumulated other comprehensive loss	(5,415)		(3,556)
Less treasury stock at cost, 31,665 and 31,332 shares, respectively	(111,183)		(100,402)
Total Raven Industries, Inc. shareholders' equity	314,646		308,955
Noncontrolling interest	—		2
Total shareholders' equity	314,646		308,957
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	403,257	$	360,245

The accompanying notes are an integral part of the consolidated financial statements.

As of January 31,
2019 2018
ASSETS
Current assets
Cash and cash equivalents $ 65,787
$ 40,535
Accounts receivable, net 54,472
58,532
Inventories 54,076
55,351
Other current assets 8,736
5,861
Total current assets 183,071
160,279

Property, plant and equipment, net 106,615
106,280
Goodwill 50,942
46,710
Amortizable intangible assets, net 16,293
10,584
Other assets 3,324
2,950
TOTAL ASSETS $ 360,245
$ 326,803

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 8,272
$ 13,106
Accrued liabilities 23,478
21,946
Other current liabilities 1,303
1,890
Total current liabilities 33,053
36,942

Other liabilities 18,235
13,795

Commitments and contingencies (see Note 12)

Raven Industries, Inc. shareholders' equity
Common stock, $1 par value, authorized shares 100,000; issued 67,289 and 67,124, respectively 67,289
67,124
Paid-in capital 59,655
59,143
Retained earnings 285,969
252,772
Accumulated other comprehensive loss (3,556 ) (2,573 )
Less treasury stock at cost, 31,332 and 31,332 shares, respectively (100,402 ) (100,402 )
Total Raven Industries, Inc. shareholders' equity 308,955
276,064
Noncontrolling interest 2
2
Total shareholders' equity 308,957
276,066
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 360,245
$ 326,803

The accompanying notes are an integral part of the consolidated financial statements.



RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars in thousands, except per-share amounts)


	For the years ended January 31,
	2020		2019		2018
Net sales	$	382,530	$	406,668	$	377,317
Cost of sales	258,783		274,119		255,752
Gross profit	123,747		132,549		121,565

Research and development expenses	31,558		26,174		16,936
Selling, general and administrative expenses	52,250		51,242		45,200

Long-lived asset impairment loss	—		—		259
Operating income	39,939		55,133		59,170

Other income (expense), net	95		6,437		(184)
Income before income taxes	40,034		61,570		58,986

Income tax expense	5,421		9,697		17,967
Net income	34,613		51,873		41,019

Net income (loss) attributable to the noncontrolling and redeemable noncontrolling interest	(583)		79		(3)

Net income attributable to Raven Industries, Inc.	$	35,196	$	51,794	$	41,022

Net income per common share:
Basic	$	0.98	$	1.44	$	1.14
Diluted	$	0.97	$	1.42	$	1.13

Comprehensive income:
Net income	$	34,613	$	51,873	$	41,019

Other comprehensive income (loss):
Foreign currency translation	(994)		(1,045)		1,234
Postretirement benefits, net of income tax (expense) benefit of $251, $(99), and $44, respectively	(865)		342		(131)
Other comprehensive income (loss), net of tax	(1,859)		(703)		1,103

Comprehensive income	32,754		51,170		42,122

Comprehensive income (loss) attributable to noncontrolling and redeemable noncontrolling interest	(583)		79		(3)
Comprehensive income attributable to Raven Industries, Inc.	$	33,337	$	51,091	$	42,125

The accompanying notes are an integral part of the consolidated financial statements.

For the years ended January 31,
2019 2018 2017
Net sales $ 406,668
$ 377,317
$ 277,395
Cost of sales 274,119
255,752
199,205
Gross profit 132,549
121,565
78,190

Research and development expenses 26,174
16,936
16,312
Selling, general and administrative expenses 51,242
45,200
33,378
Long-lived asset impairment loss —
259
87
Operating income 55,133
59,170
28,413

Other income (expense), net 6,437
(184 ) (560 )
Income before income taxes 61,570
58,986
27,853

Income tax expense 9,697
17,967
7,661
Net income 51,873
41,019
20,192

Net income (loss) attributable to the noncontrolling interest 79
(3 ) 1

Net income attributable to Raven Industries, Inc. $ 51,794
$ 41,022
$ 20,191

Net income per common share:
Basic $ 1.44
$ 1.14
$ 0.56
Diluted $ 1.42
$ 1.13
$ 0.56

Comprehensive income:
Net income $ 51,873
$ 41,019
$ 20,192

Other comprehensive income (loss):
Foreign currency translation (1,045)
1,234
50
Postretirement benefits, net of income tax (expense) benefit of ($99), $44, and $129, respectively 342
(131 ) (225 )
Other comprehensive income (loss), net of tax (703 ) 1,103
(175 )

Comprehensive income 51,170
42,122
20,017

Comprehensive income (loss) attributable to noncontrolling interest 79
(3 ) 1

Comprehensive income attributable to Raven Industries, Inc. $ 51,091
$ 42,125
$ 20,016

The accompanying notes are an integral part of the consolidated financial statements.



RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars and shares in thousands, except per-share amounts)

$1 Par Common Stock Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehen-sive Income (Loss) Raven Industries, Inc. Equity Non-controlling Interest Total Equity
Shares Cost
Balance January 31, 2016 $ 67,006
$ 53,907
30,500
$ (82,700 ) $ 229,443
$ (3,501 ) $ 264,155
$ 74
$ 264,229
Net income —
—
—
—
20,191
—
20,191
1
20,192
Other comprehensive (loss), net of income tax —
—
—
—
—
(175 ) (175 ) —
(175 )
Cash dividends ($0.52 per share) —
216
—
—
(18,985 ) —
(18,769 ) —
(18,769 )
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest —
—
—
—
—
—
—
(70 ) (70 )
Director shares issued 19
(19 ) —
—
—
—
—
—
—
Shares issued on vesting of stock units, net of shares withheld for employee taxes 35
(291 ) —
—
—
—
(256 ) —
(256 )
Shares repurchased —
—
484
(7,702 ) —
—
(7,702 ) —
(7,702 )
Share-based compensation —
3,071
—
—
—
—
3,071
—
3,071
Income tax impact related to share-based compensation —
(1,089 ) —
—
—
—
(1,089 ) —
(1,089 )
Balance January 31, 2017 67,060
55,795
30,984
(90,402 ) 230,649
(3,676 ) 259,426
5
259,431
Net income —
—
—
—
41,022
—
41,022
(3 ) 41,019
Other comprehensive income, net of income tax —
—
—
—
—
1,103
1,103
—
1,103
Cash dividends ($0.52 per share) —
214
—
—
(18,899 ) —
(18,685 ) —
(18,685 )
Director shares issued 26
(26 ) —
—
—
—
—
—
—
Shares issued on stock options exercised, net of shares withheld for employee taxes 21
(311 ) —
—
—
—
(290 ) —
(290 )
Shares issued on vesting of stock units, net of shares withheld for employee taxes 17
(254 ) —
—
—
—
(237 ) —
(237 )
Shares repurchased —
—
348
(10,000 ) —
—
(10,000 ) —
(10,000 )
Share-based compensation —
3,725
—
—
—
—
3,725
—
3,725
Balance January 31, 2018 67,124
59,143
31,332
(100,402 ) 252,772
(2,573 ) 276,064
2
276,066
Net income —
—
—
—
51,794
—
51,794
79
51,873
Other comprehensive (loss), net of income tax —
—
—
—
—
(703 ) (703 ) —
(703 )
Reclassification due to ASU 2018-02 adoption —
—
—
—
280
(280 ) —
—
—
Cash dividends ($0.52 per share) —
203
—
—
(18,877 ) —
(18,674 ) —
(18,674 )
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest —
—
—
—
—
—
—
(79 ) (79 )
Shares issued on stock options exercised, net of shares withheld for employee taxes 113
(2,750 ) —
—
—
—
(2,637 ) —
(2,637 )
Shares issued on vesting of stock units, net of shares withheld for employee taxes 52
(892 ) —
—
—
—
(840 ) —
(840 )
Share-based compensation —
3,951
—
—
—
—
3,951
—
3,951
Balance January 31, 2019 $ 67,289
$ 59,655
31,332
$ (100,402 ) $ 285,969
$ (3,556 ) $ 308,955
$ 2
$ 308,957

The accompanying notes are an integral part of the consolidated financial statements.



	$1 Par Common Stock		Paid-in Capital		Treasury Stock At Cost		Retained Earnings		Accumulated Other Comprehen-sive Income (Loss)		Raven Industries, Inc. Equity		Non-controlling Interest		Total Equity		Redeem-able Non-controlling Interest

Balance January 31, 2017	$	67,060	$	55,795	$	(90,402)	$	230,649	$	(3,676)	$	259,426	$	5	$	259,431	$	—
Net income	—		—		—		41,022		—		41,022		(3)		41,019		—
Other comprehensive income, net of income tax	—		—		—		—		1,103		1,103		—		1,103		—
Cash dividends ($0.52 per share)	—		214		—		(18,899)		—		(18,685)		—		(18,685)		—
Director shares issued	26		(26)		—		—		—		—		—		—		—

Shares issued on stock options exercised, net of shares withheld for employee taxes	21		(311)		—		—		—		(290)		—		(290)		—
Shares issued on vesting of stock units, net of shares withheld for employee taxes	17		(254)		—		—		—		(237)		—		(237)		—
Shares repurchased	—		—		(10,000)		—		—		(10,000)		—		(10,000)		—
Share-based compensation	—		3,725		—		—		—		3,725		—		3,725		—
Balance January 31, 2018	67,124		59,143		(100,402)		252,772		(2,573)		276,064		2		276,066		—
Net income	—		—		—		51,794		—		51,794		79		51,873		—
Other comprehensive (loss), net of income tax	—		—		—		—		(703)		(703)		—		(703)		—
Reclassification due to ASU 2018-02 adoption	—		—		—		280		(280)		—		—		—		—
Cash dividends ($0.52 per share)	—		203		—		(18,877)		—		(18,674)		—		(18,674)		—
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest	—		—		—		—		—		—		(79)		(79)		—

Shares issued on stock options exercised, net of shares withheld for employee taxes	113		(2,750)		—		—		—		(2,637)		—		(2,637)		—
Shares issued on vesting of stock units, net of shares withheld for employee taxes	52		(892)		—		—		—		(840)		—		(840)		—

Share-based compensation	—		3,951		—		—		—		3,951		—		3,951		—
Balance January 31, 2019	67,289		59,655		(100,402)		285,969		(3,556)		308,955		2		308,957		—
Net income	—		—		—		35,196		—		35,196		(1)		35,195		(582)
Other comprehensive (loss), net of income tax	—		—		—		—		(1,859)		(1,859)		—		(1,859)		—
Business acquisition of less than wholly owned subsidiary (See Note 6)	—		—		—		—		—		—		—		—		24,315
Redemption of noncontrolling interest	—		199		—		—		—		199		—		199		(2,431)
Cash dividends ($0.52 per share)	—		216		—		(18,865)		—		(18,649)		—		(18,649)		—
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest	—		—		—		—		—		—		(1)		(1)		—

Shares issued on stock options exercised, net of shares withheld for employee taxes	41		(1,069)		—		—		—		(1,028)		—		(1,028)		—
Shares issued on vesting of stock units, net of shares withheld for employee taxes	106		(2,464)		—		—		—		(2,358)		—		(2,358)		—
Shares repurchased	—		—		(10,781)		—		—		(10,781)		—		(10,781)		—
Share-based compensation	—		4,971		—		—		—		4,971		—		4,971		—
Balance January 31, 2020	$	67,436	$	61,508	$	(111,183)	$	302,300	$	(5,415)	$	314,646	$	—	$	314,646	$	21,302

The accompanying notes are an integral part of the consolidated financial statements.



RAVEN INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)


	For the years ended January 31,
	2020		2019		2018
OPERATING ACTIVITIES:
Net income	$	34,613	$	51,873	$	41,019
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	13,770		13,296		12,743
Amortization of intangible assets	2,471		1,827		2,059
Long-lived asset impairment loss	—		—		259
Change in fair value of acquisition-related contingent consideration	412		708		457
Loss from equity investments	—		—		114
Gain from sale of equity method investments	—		(5,785)		—
Deferred income taxes	1,506		953		(787)
Share-based compensation expense	4,971		3,951		3,725
Other operating activities, net	(335)		(2,424)		2,053
Change in operating assets and liabilities	(2,536)		1,553		(16,681)
Net cash provided by operating activities	54,872		65,952		44,961

INVESTING ACTIVITIES:
Capital expenditures	(8,560)		(14,127)		(12,011)
Payments related to business acquisitions, net of cash acquired	(53,317)		(7,671)		(13,267)
Proceeds from sale or maturities of investments	1,170		7,334		250
Purchases of investments	(1,118)		(745)		(273)
Proceeds (disbursements) from sale of assets, settlement of liabilities	3,459		832		(333)
Other investing activities, net	(243)		(2,067)		(41)
Net cash used in investing activities	(58,609)		(16,444)		(25,675)

FINANCING ACTIVITIES:
Dividends paid	(18,650)		(18,753)		(18,685)
Payments for common shares repurchased	(10,781)		—		(10,000)
Proceeds from borrowings	33,593		—		—
Payment of debt	(39,762)		—		—
Payment of acquisition-related contingent liabilities	(1,306)		(1,324)		(408)

Restricted stock units vested and issued	(2,358)		(840)		(237)
Employee stock option exercises net of tax benefit	(1,028)		(2,637)		(290)
Other financing activities, net	(595)		(201)		(101)
Net cash used in financing activities	(40,887)		(23,755)		(29,721)
Effect of exchange rate changes on cash	(456)		(501)		322
Net increase (decrease) in cash and cash equivalents	(45,080)		25,252		(10,113)
Cash and cash equivalents at beginning of year	65,787		40,535		50,648
Cash and cash equivalents at end of year	$	20,707	$	65,787	$	40,535

The accompanying notes are an integral part of the consolidated financial statements.

For the years ended January 31,
2019 2018 2017
OPERATING ACTIVITIES:
Net income $ 51,873
$ 41,019
$ 20,192
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 13,296
12,743
13,169
Amortization of intangible assets 1,827
2,059
2,267
Long-lived asset impairment loss —
259
87
Change in fair value of acquisition-related contingent consideration 708
457
36
Loss from equity investments —
114
72
Gain from sale of equity method investments (5,785 ) —
—
Deferred income taxes 953
(787 ) 307
Share-based compensation expense 3,951
3,725
3,071
Other operating activities, net (2,424 ) 2,053
2,390
Change in operating assets and liabilities 1,553
(16,681 ) 7,045
Net cash provided by operating activities 65,952
44,961
48,636

INVESTING ACTIVITIES:
Capital expenditures (14,127 ) (12,011 ) (4,796 )
Payments related to business acquisitions (7,671 ) (13,267 ) —
Proceeds from sale or maturities of investments 7,334
250
250
Purchases of investments (745 ) (273 ) (750 )
Proceeds (disbursements) from sale of assets, settlement of liabilities 832
(333 ) 1,188
Other investing activities, net (2,067 ) (41 ) (534 )
Net cash used in investing activities (16,444 ) (25,675 ) (4,642 )

FINANCING ACTIVITIES:
Dividends paid (18,753 ) (18,685 ) (18,839 )
Payments for common shares repurchased —
(10,000 ) (7,702 )
Payment of acquisition-related contingent liabilities (1,324 ) (408 ) (354 )
Restricted stock units vested and issued (840 ) (237 ) (256 )
Employee stock option exercises net of tax benefit (2,637 ) (290 ) —
Other financing activities, net (201 ) (101 ) —
Net cash used in financing activities (23,755 ) (29,721 ) (27,151 )
Effect of exchange rate changes on cash (501 ) 322
23
Net increase (decrease) in cash and cash equivalents 25,252
(10,113 ) 16,866
Cash and cash equivalents at beginning of year 40,535
50,648
33,782
Cash and cash equivalents at end of year $ 65,787
$ 40,535
$ 50,648

The accompanying notes are an integral part of the consolidated financial statements.



RAVEN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per-share amounts)



NOTE 1			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

Raven Industries, Inc. (the Company or Raven) is a diversified technology company providing a variety of products to customers within the industrial, agricultural, geomembrane, construction, commercial lighter-than-air and aerospace/defense markets. The Company conducts this business through the following direct and indirect subsidiaries: Aerostar International, Inc. (Aerostar); Aerostar Technical Solutions, Inc. (ATS), ~~formerly named Vista Research, Inc. or "Vista;"~~ Aerostar Integrated Systems, LLC (AIS); Dot Technology Corp. (DOT); Raven CLI Construction, Inc.; Raven Engineered Films, Inc.; Raven Slingshot, Inc.; Raven International Holding Company BV (Raven Holdings); Raven Industries Canada, Inc. (Raven Canada); Raven Europe BV (formerly known as SBG Innovatie BV ~~(SBG)~~or "SBG"); Raven Industries Australia Pty Ltd (Raven Australia); Raven Industries Holding, LLC, and Raven do Brasil Participacoes E Servicos Technicos LTDA (Raven Brazil). The Company and these subsidiaries comprise ~~three~~3 unique operating units, or divisions, classified into three reportable business segments (Applied Technology, Engineered Films, and Aerostar).

The consolidated financial statements for the periods included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Business Combinations

The Company accounts for the acquisition of a business using the acquisition method of accounting. Assets acquired and liabilities assumed, including amounts attributed to noncontrolling interest, are recorded at their fair values upon acquisition. Assigning fair values requires the Company to make significant estimates and assumptions regarding the fair value of identifiable intangible assets, property, plant and equipment, deferred tax asset valuation allowances, and liabilities, such as uncertain tax positions and contingencies. Independent valuation specialists are used to assist in determining certain fair value calculations. The Company may refine these estimates, if necessary, over a period not to exceed one year by taking into consideration new information that, if known at the acquisition date, would have affected the fair values ascribed to the assets acquired and liabilities assumed.

Significant estimates and assumptions are used in estimating the value of acquired identifiable intangible assets, including estimating future cash flows based on revenues and margins that the Company expects to generate following the acquisition, applying an appropriate discount rate to estimate a present value of those cash flows and determining their useful lives. Subsequent changes to projections driven by actual results following the acquisition date could require the Company to record impairment charges.

Acquisition-related costs are recognized as an expense when incurred and are classified as selling, general and administrative expenses in the Consolidated Statements of Income and Comprehensive Income. Acquisition-related costs incurred were not material for any of the periods presented in this Form 10-K.

Noncontrolling and Redeemable Noncontrolling Interest

Noncontrolling interests represent capital contributions and income and loss attributable to the owners of less than wholly-owned and consolidated entities. Noncontrolling interests in subsidiaries that are redeemable for cash or other assets outside of the Company’s control are classified as mezzanine equity, at the greater of the carrying value or the redemption value, and therefore are not included in either equity or liabilities. The increases or decreases in the estimated redemption amount are recorded with corresponding adjustments to paid-in capital.

The Company ~~owns~~owned a 75% ofinterest in a business venture, AIS, to pursue potential product and support services contracts through ~~agencies and instrumentalities~~U.S. government agencies. The Company acquired the remaining 25% noncontrolling interest of AIS in the ~~United States government.~~fourth quarter of fiscal year 2020 at an immaterial additional cost to the company. This business venture is included in the Aerostar ~~business~~segment.

(Dollars in thousands, except per-share amounts)

The Company acquired a majority ownership in DOTin the fiscal 2020 fourth quarter. The majority ownership in DOT is further described in Note 6 "Acquisitions and Investments in Businesses and Technologies," and aligns under the Applied Technology segment. ~~No capital contributions have been made~~The acquisition provides various put options that, if exercised by the noncontrolling interest ~~since~~shareholders, would obligate the ~~initial capitalization~~Company to purchase the remaining 36% of the outstanding DOT shares as of January 31, 2020, at a price derived from a specific formula. Due to the redemption features, the minority interest shareholders’ value is classified as a redeemable noncontrolling interest in ~~fiscal year 2012.~~ the Company’s Consolidated Balance Sheets. At January 31, 2020, redeemable noncontrolling interests were reported at their carrying value of $21,302 versus the redemption value, as the carrying value was greater than the estimated redemption value.

Given the Company's controlling financial interest, the accounts of ~~the business venture~~AIS and DOT have been consolidated with the accounts of the Company, and a noncontrolling interest has been recorded for the noncontrolling investor's interests in the net assets and operations of the business venture.

Related Party Transactions

Following the acquisition of DOT, the Company sold products to, paid rent to, and purchased services for manufacturing, R&D, selling, and administration from a business owned by a minority interest shareholder of DOT. The total of these related party transactions was $3,176 for fiscal 2020, of which $409 was reported in accounts payable at January 31, 2020.

Equity Investments

~~In February 2016, the Applied Technology Division acquired~~The Company owned an interest of approximately 5% in Ag-Eagle Aerial Systems, Inc. (AgEagle)~~. AgEagle was considered a variable interest entity (VIE) and the Company’s equity ownership interest in AgEagle was considered a variable interest. Prior to the equity interest~~ before being sold for an immaterial gain in fiscal year ~~2019, the~~2019. The Company accounted for its investment in AgEagle under the equity method of accounting as the Company had the ability to exercise significant influence over the operating policies of ~~AgEagle through the Company's representation on AgEagle's Board of Directors and the exclusive distribution agreement between the companies. However,~~AgEagle; however the Company was not the primary beneficiary as the Company did not have the power to direct the activities that most significantly impacted the VIE’s economic performance and the obligation to absorb the majority of the losses or the right to receive the majority of the benefits of the VIE.

The Company considers whether the value of any of its equity method investments has been impaired whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If the Company considered any such decline to be other than temporary (based on various factors, including historical financial results, product development activities, and the overall health of the affiliate's industry), an impairment loss would be recorded.beneficiary. In April 2017, the Company determined the investment in AgEagle and the related customer relationship intangible asset were fully impaired. The resulting accelerated equity method investment loss and impairment loss recorded were not material to the Company.

The Company owned an interest of approximately 22% in Site-Specific Technology Development Group, Inc. (SST) before being sold in fiscal year 2019. The Company had significant influence, but there was neither a controlling interest nor a majority interest in the risks or rewards of SST. As a result, this affiliate investment was accounted for using the equity method.

~~The~~ Company's proceeds from the sale of its ownership interest in SST were ~~$6,556~~$6,556 and was reported as "Proceeds from sale or maturity of investments" in the Consolidated Statements of Cash Flows in fiscal year 2019. The Company recognized a gain of ~~$5,785~~$5,785 from the sale reported as "Other income (expense), net" in the Consolidated Statements of Income and Comprehensive

~~(Dollars in thousands, except per-share amounts)~~

Income for the fiscal year ended January 31, 2019. This amount ~~includes~~included a ~~fifteen~~15 percent hold-back provision held in an escrow account which ~~is expected to be settled~~was collected in fiscal 2020.

The ~~investment balances for both AgEagle and SST are included in “Other assets” on the Consolidated Balance Sheet at January 31, 2018 while the~~ Company's share of the results of AgEagle and SST operations are included in ~~“Other~~"Other income (expense), ~~net”~~net" for fiscal years 2019 ~~2018,~~ and ~~2017.~~2018.

Use of Estimates

Preparing the financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make certain estimates and assumptions. These 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 period. The Company's forecasts, based principally on estimates, are critical inputs to asset valuations such as those for inventory or goodwill. These assumptions and estimates require significant judgment and actual results could differ from assumed and estimated amounts.

Foreign Currency

The Company's subsidiaries that operate outside the United States use the local currency as their functional currency. The functional currency is translated into U.S. dollars for balance sheet accounts using the period-end exchange rates and average exchange rates for the Consolidated Statements of Income and Comprehensive Income. Adjustments resulting from financial statement translations are included as foreign currency translation adjustments in ~~“Accumulated~~"Accumulated other comprehensive income (loss)”" within shareholders' equity in the Consolidated Balance Sheets. Foreign currency transaction gains or losses are recognized in the period incurred and are included in ~~“Other~~"Other income (expense), ~~net”~~net" in the Consolidated Statements of Income and Comprehensive Income. Foreign currency transaction gains and losses were not material for fiscal years 2020 and 2019. Foreign currency transaction gains or losses on intercompany notes receivable and notes payable denominated in foreign currencies for which settlement is not planned in the foreseeable future are considered part the net investment and are reported in the same manner as foreign currency translation adjustments.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturities of three or fewer months to be cash equivalents. Cash and cash equivalent balances are principally concentrated in checking and money market ~~and savings accounts.~~funds. Certificates of deposit that mature in over 90 days but less than one year are considered short-term investments. Certificates of deposit that mature in

(Dollars in thousands, except per-share amounts)

one year or more are considered to be other long-term assets and are carried at cost. The Company held cash and cash equivalents in accounts in the United States of ~~$61,221~~$14,003 and ~~$36,434~~$61,221 as of January 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The Company held cash and cash equivalents in accounts outside the United States of ~~$4,566~~$6,704 and ~~$4,101~~$4,566 as of January 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount, do not bear interest, and are considered past due based on invoice terms. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses. This is based on historical write-off experience by segment and an estimate of the collectability of past due accounts. Unbilled receivables arise when revenues have been earned, but not billed, and are related to differences in timing. Unbilled receivables were ~~$1,391~~$6,954 and ~~$2,447~~$1,391 as of January 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

Inventory Valuation

Inventories are carried at the lower of cost or net realizable value, with cost determined on the first-in, first-out basis. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.

Pre-Contract Costs

From time to time, pre-contract costs, ~~are incurred,~~ excluding start-up costs which are expensed as incurred, are ~~deferred~~incurred and ~~included in "Inventories" on the Consolidated Balance Sheets~~deferred if the Company determines that it is probable it will be awarded the specific anticipated contract. Deferred pre-contract costs are included in "Inventories, net" on the Consolidated Balance Sheets and periodically reviewed and assessed for recoverability under the contract. Write-offs of pre-contract costs are charged to cost of sales when it becomes probable that such costs will not be recoverable. NoNaN pre-contract costs were included in ~~"Inventories"~~"Inventories, net" on the Consolidated Balance Sheets at January 31, ~~2019~~2020 or ~~2018.~~2019. Additionally, there were no0 pre-contract costs written-off in fiscal years 2020, 2019 ~~2018~~ or ~~2017.~~2018.

Property, Plant and Equipment

Property, plant and equipment held for use is carried at the asset's cost and depreciated over the estimated useful life of the asset.

~~(Dollars in thousands, except per-share amounts)~~

The estimated useful lives used for computing depreciation are as follows:



Building and improvements			15 - 39 years
Manufacturing equipment by segment
Applied Technology			3 - 5 years
Engineered Films			5 - 12 years
Aerostar			3 - 5 years
Furniture, fixtures, office equipment, and other			3 - 7 years

The cost of maintenance and repairs is charged to expense in the period incurred, and renewals and betterments are capitalized. The cost and related accumulated depreciation of assets sold or disposed are removed from the accounts and the resulting gain or loss is reflected in the Consolidated Statements of Income and Comprehensive Income.

Leases

The Company adopted the new lease accounting standard, "Accounting Standards Codification Topic 842 Leases (ASC 842)" using the modified retrospective basis for all agreements existing as of February 1, 2019 as described further below under Accounting Standards Adopted. Results for reporting periods beginning after January 31, 2019, are presented under ASC 842 while prior period amounts continue to be reported in accordance with legacy lease guidance.

The Company recognizes a right-of-use asset and lease liability for all financing and operating leases with terms greater than twelve months. The lease liability is measured based on the present value of the lease payments not yet paid. The right-of-use asset is measured based on the initial measurement of the lease liability adjusted for any direct costs incurred upon commencement of the lease. The right-of-use assets are amortized on a straight-line basis over the lease term, and are tested for impairment in a manner consistent with the other long-lived assets held by the Company.

Fair Value Measurements

Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company uses the

(Dollars in thousands, except per-share amounts)

established fair value hierarchy, which classifies or prioritizes the inputs used in measuring fair value. These classifications include:

Level 1 - Observable inputs such as quoted prices in active markets.

Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 - Unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.

The Company's financial assets required to be measured at fair value on a recurring basis include cash and cash equivalents, short-term investments and mutual funds. The Company determines fair value of its cash equivalents, short-term investments and mutual funds through quoted market prices. Mutual funds relate to the Company's deferred compensation plan further described within Note 8 "Employee Postretirement ~~Benefits".~~Benefits." The fair values of accounts receivable and accounts payable approximate their carrying values because of the short-term nature of these instruments.

The Company's goodwill and long-lived assets, including intangible assets subject to amortization, are measured at fair value on a non-recurring basis. These valuations are derived from valuation techniques in which one or more significant inputs are not observable. Fair value measurements associated with goodwill and long-lived assets are further described in Note 7 "Goodwill, and Long-Lived ~~Assets, and Other Charges"~~Assets."

For all acquisitions, the Company is required to measure the fair value of the net identifiable tangible and intangible assets acquired. In addition, the Company determines the estimated fair value of contingent consideration as of the acquisition date, and subsequently at the end of each reporting period. These valuations are derived from valuation techniques in which one or more significant inputs are not observable. Fair value measurements associated with acquisitions, including acquisition-related contingent liabilities, are described in Note 6 ~~"Acquisition of~~"Acquisitions and Investments in Businesses and ~~Technologies"~~Technologies."

Intangible Assets

Intangible assets, primarily comprised of technologies acquired through acquisitions, are recorded at cost and presented net of accumulated amortization. Amortization is computed using the method that best approximates the pattern of economic benefits which the asset provides. The Company has used both the straight-line method and the undiscounted cash flows method to appropriately allocate the cost of intangible assets to earnings in each reporting period.

The straight-line method allocates the cost of such intangible assets ratably over the asset’s life. Under the undiscounted cash flow method, the estimated cash flow attributable to each year of an intangible asset’s life is calculated as a percentage of the total of the cash flows over the asset’s life and that percentage is applied to the initial value of the asset to determine the annual amortization to be recorded.

Intangible assets also include patents, trademarks, and other product rights attained to protect the Company’s intellectual property. The estimated useful lives of the Company’s intangible assets range from 3 to 20 years.

The Company acquired in-process R&D intangible assets in business combinations transacted during the fourth quarter of fiscal year 2020. These assets are accounted for as indefinite-lived intangible assets and will be amortized when the R&D project is completed or abandoned. Upon completion of each project, a determination of the useful life of the acquired intangible assets is made and they are amortized to expense. These assets are classified as "Intangible assets, net" on the Consolidated Balance Sheets. These assets are reported at fair value based on the discounted probable future cash flows on a project-by-project basis and are subject to at least an annual assessment for impairment going forward.

Goodwill

The Company recognizes goodwill as the excess cost of an acquired business over the net amount assigned to assets acquired and liabilities assumed. Goodwill is allocated to the reporting units that are expected to benefit from the synergies of the business combination. Acquisition earn-out payments are accrued at fair value as of the purchase date and payments reduce the accrual

~~(Dollars in thousands, except per-share amounts)~~

without affecting goodwill. Any change in the fair value of the contingent consideration after the acquisition date is recognized in "Cost of sales" in the Consolidated Statements of Income and Comprehensive Income.

Goodwill is tested for impairment on an annual basis during the fourth quarter and between annual tests whenever a triggering event indicates there may be an impairment. Impairment tests of goodwill are performed at the reporting unit level. A qualitative impairment assessment over relevant events and circumstances may be assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If events and circumstances indicate the fair value of a reporting unit may be less than its carrying value, then the fair values are estimated based on discounted cash flows

(Dollars in thousands, except per-share amounts)

and are compared with the corresponding carrying value of the reporting unit. If the fair value of the reporting unit is less than the carrying amount, a goodwill impairment loss is recognized for the amount that the carrying value of the reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to the reporting unit.

When performing goodwill impairment testing, the fair values of reporting units are determined based on valuation techniques, primarily discounted cash flow projections, using the best available ~~information, primarily discounted cash flow projections.~~information. Such valuations are derived from valuation techniques in which one or more significant inputs are not observable (Level 3 fair value measures).

Long-Lived Assets

The Company periodically assesses the recoverability of long-lived and intangible assets. An impairment loss is recognized when the carrying amount of an asset group exceeds the estimated undiscounted cash flows used in determining the fair value of the asset group. The amount of the impairment loss to be recorded is the excess of the carrying value of the assets within the group over their fair value. When performing long-lived asset impairment testing, the fair values of an asset are determined based on valuation techniques using the best available information. Such valuations are derived from valuation techniques in which one or more significant inputs are not observable (Level 3 fair value measures).

Long-lived assets determined to be held for sale and classified as such in accordance with the applicable guidance are reported as long-term assets at the lower of the asset's carrying amount or fair value less the estimated cost to sell. Depreciation is not recorded once a long-lived asset has been classified as held for sale.

Acquisition-Related Contingent Consideration

Acquisition-related contingent consideration represents an obligation of the Company to transfer additional assets or equity interests if specified future events occur or conditions are met. This contingency is accounted for at fair value either as a liability or equity depending on the terms of the acquisition agreement. The Company determines the estimated fair value of contingent consideration as of the acquisition date, and subsequently at the end of each reporting period. In doing so, the Company makes significant estimates and assumptions regarding future events or conditions being achieved under the subject contingent agreement as well as the appropriate discount rate to apply. Such valuations are derived from valuation techniques in which one or more significant inputs are not observable (Level 3 fair value measures).

Litigation and Contingencies

Legal costs are recognized as an expense in the period incurred. The Company is involved as a party in lawsuits, claims, regulatory inquiries, or disputes arising in the normal course of business, some of which allege substantial monetary damages. The Company accrues for any loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate than any other amount within the range, the minimum amount of the range is recorded as a liability. Amounts recovered by insurance, if any, are recognized when they are realized.

Revenue Recognition

The Company adopted the new revenue recognition standard, Revenue from Contracts with Customers, using the modified retrospective method applied to all contracts not completed as of January 31, 2018. Results for reporting periods beginning after January 31, 2018, are presented under ASC 606 while prior period amounts continue to be reported in accordance with legacy ASC 605. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or results of operations as of the adoption date as a significant majority of our sales revenue is recognized when products are shipped from our manufacturing facilities.

Revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those goods or providing services. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

When determining whether the customer has obtained control of the goods or services, the Company considers any future performance obligations. Generally, there is no post-shipment obligation on products sold other than warranty obligations in the

~~(Dollars in thousands, except per-share amounts)~~

normal and ordinary course of business. In the event significant post-shipment obligations were to exist, revenue recognition would be deferred until the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenue. Estimated returns, sales allowances, and warranty charges, if applicable, are recorded at the same time revenue is recorded.

Performance obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account for purposes of revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, are not distinct. For contracts with multiple performance obligations, standalone selling price is generally readily observable. The Company’s performance obligations are satisfied at a point in time or over time as work progresses. Revenue from goods and services transferred to customers at a point in time accounts for a majority of

(Dollars in thousands, except per-share amounts)

the Company’s revenues. Revenue on these contracts is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control upon shipment.

The Company uses an input measure to determine progress towards completion for revenue generated from products and services transferred to customers over time. Under this method, net sales and gross profit are recognized as work is performed generally based on the relationship between the actual costs incurred and the total estimated costs at completion (“("the cost-to-cost ~~method”~~method") or based on efforts for measuring progress towards completion in situations in which this approach is more representative of the progress on the contract than the cost-to-cost method. Contract costs include labor, material, overhead and, when appropriate, general and administrative expenses. Changes to the original estimates may be required during the life of the contract, and such estimates are reviewed on a regular basis. Sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs. For performance obligations related to ~~long term~~service contracts, when estimates of total costs to be incurred on a performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.

Sales returns

The right of return may exist explicitly or implicitly with our customers. The Company’s return policy allows for customer returns only upon the Company's authorization. Goods returned must be a product the Company continues to market and must be in salable condition. When the right of return exists, we adjust the transaction price for the estimated effect of returns. We estimate the expected returns based on historical sales levels, the timing and magnitude of historical sales return levels as a percent of sales, type of product, type of customer and a projection of this experience into the future.

Shipping and handling costs

Amounts billed to customers for shipping and handling activities after the customer obtains control are treated as a promised service performance obligation and recorded in net sales in the accompanying Consolidated Statements of Income and Comprehensive Income. Shipping and handling costs incurred by the Company for the delivery of goods to customers are considered a cost to fulfill the contract and are included in cost of sales in the accompanying Consolidated Statements of Income and Comprehensive Income.

Sales tax

Taxes that are collected by the Company from a customer, which are assessed by governmental authorities that are both imposed upon and concurrent with a specific revenue-producing transaction, are excluded from revenues.

Operating Expenses

The primary types of operating expenses are classified in the income statement as follows:

Cost of sales

Research and development (R&D) expenses

Selling, general, and administrative (SG&A)expenses

Direct material costs

Material acquisition and handling costs

Direct labor

Factory overhead including depreciation and amortization

Inventory obsolescence

Product warranties

Shipping and handling cost

Personnel costs

Professional service fees

Material and supplies

Facility allocation

Personnel costs

Professional service fees

Advertising

Promotions

Information technology equipment depreciation

Office supplies

Facility allocation

Bad debt expense

Total engineering costs consist of R&D and other engineering support related expenses. R&D costs are internal direct and indirect costs associated with development of technologies to support the Company's proprietary product lines in each of its divisions.

~~(Dollars in thousands, except per-share amounts)~~

These R&D costs are expensed as incurred. Engineering support related expenses may be allocated to overhead, and thus cost of sales, or R&D expenses based on the focus of the engineering effort.

General and administrative expenses included in SG&A are not allocated at the segment level. The Company's gross margin and segment operating income may not be comparable to industry peers due to variability in the classification of these expenses across the industries in which the Company operates.

Warranties

Accruals necessary for product warranties are estimated based on historical warranty costs in relation to sales and average time elapsed between purchases and returns for each division. Additional accruals are made for any significant, discrete warranty issues.

(Dollars in thousands, except per-share amounts)

Share-Based Compensation

The Company records compensation expense related to its share-based compensation plans using the fair value method. Under this method, the fair value of share-based compensation is determined as of the grant date and the related expense is recorded over the period in which the share-based compensation vests.

Income Taxes

Deferred income taxes reflect future tax effects of temporary differences between the tax and financial reporting basis of the Company's assets and liabilities measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will affect taxable income. When necessary, deferred tax assets are reduced by a valuation allowance to reflect realizable value. All deferred tax balances are reported as long-term on the Consolidated Balance Sheets. Accruals are maintained for uncertain tax positions.

Accounting Pronouncements

Accounting Standards Adopted

In the fiscal ~~2019~~2020 fourth quarter, the Company early adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) ~~No. 2018-14, "Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20):~~Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans" (ASU 2018-14) issued in August 2018. The amendments in this guidance modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments in this Update remove disclosures that no longer are considered cost beneficial, clarify the specific requirements for certain disclosures, and add disclosure requirements identified as relevant. The Company does not have a defined benefit pension plan but does have an unfunded defined benefit postretirement plan that offers postretirement medical and other benefits to certain retired and active senior executives and their spouses. The Company elected to early adopt the guidance on a retrospective basis applied to all periods. ASU 2018-14 is disclosure in nature only and as such did not significantly impact the Company's consolidated financial statements.

In the fiscal 2019 first quarter, the Company early adopted FASB ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" (ASU 2018-02) issued in February 2018. The amendments in this guidance allow for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Acts (TCJA). Consequently, the amendments eliminate the stranded tax effects resulting from the TCJA and are intended to improve the usefulness of information reported. The Company elected to apply the amendments in the period of adoption. The Company recorded a ~~$280~~ reclassification entry for the stranded tax effects in Accumulated Other Comprehensive Income related to Raven's post-retirement plan further disclosed in Note 8 "Employee Retirement Benefits". The impact of the reclassification is reported as "Reclassification due to ASU 2018-02 adoption" in the Consolidated Statements of Shareholders' Equity and Note 3 "Accumulated Other Comprehensive Income (Loss)".

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU No. 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting" (ASU 2017-09) on a prospective basis. The guidance amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Topic 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards as equity instruments or liability instruments are the same immediately before and after the modification to the award. The Company did not modify any of its outstanding awards during the twelve-month period ended January 31, 2019; therefore, the adoption of this guidance had no impact on its consolidated financial statements.

In the fiscal 2019 first quarter when it became effective, the Company adopted, the FASB ASU No. 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" (ASU 2017-07). The guidance clarifies where the cost components of the net benefit cost should be reported in the income statement and it allows only the service cost to be capitalized. The adoption of this guidance resulted in ~~$28~~ ~~of the net periodic~~

~~(Dollars in thousands, except per-share amounts)~~

~~benefit cost being reported as a charge to operating income and~~ ~~$284~~ reported as a charge to non-operating income (expense) for the twelve-months ended January 31, 2019. The classification of this charge on the Consolidated Statements of Income and Comprehensive Income is described in Note 8 "Employee Retirement Benefits" in the Notes to the Consolidated Financial Statements. The net periodic benefit cost for the fiscal year 2018 and 2017 was not material.

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory" (ASU 2016-16). Previous GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This prohibition on recognition is an exception to the principle of comprehensive recognition of current and deferred income taxes in GAAP. This new guidance eliminates the exception for an intra-entity transfer of an asset other than inventory. The Company did not have any intra-entity transfers of assets impacted by this guidance, as such the adoption of this guidance had no impact on its consolidated financial statements.

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" (ASU 2016-15). The specific classification issues clarified in the guidance either were not applicable to the Company or are consistent with how the Company previously classified them, therefore the adoption of this guidance had no impact on its consolidated financial statements.

In the fiscal 2019 first quarter when it became effective, the Company adopted FASB ASU No. 2016-01, "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities" (ASU 2016-01).The updated accounting guidance requires equity securities to be measured at fair value with changes in the fair value recognized through net income. An entity’s equity investments that are accounted for under the equity method of accounting or result in consolidation of an investee are not included within the scope of this update. The impacted financial instruments held at the time of adoption were not material, as such, the adoption of this guidance and the subsequent changes to Subtopic 825-10 in ASU 2018-03 "Technical Corrections and Improvements to Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," did not have a material impact on the Company's consolidated financial statements.

In the fiscal 2019 first quarter, the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASU 2014-09). ASU 2014-09 provides a comprehensive new recognition model that requires recognition of revenue when a company transfers promised goods or services to customers in an amount that reflects the consideration which a company expects to receive in exchange for those goods or services. This guidance supersedes the revenue recognition requirements in FASB ASC Topic 605, "Revenue Recognition," and most industry-specific guidance. ASU 2014-09 defines a five-step process to achieve this core principle. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. The Company adopted ASU 2014-09 on a modified retrospective basis. The comparative historical information has not been adjusted and continues to be reported under ASC Topic 605 as previously presented. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements or results of operations as of the adoption date and for the three- and twelve-months ended January 31, 2019, as a significant majority of the Company's sales revenue is recognized when products are shipped from the Company's manufacturing facilities. As part of the adoption of ASU 2014-09 the Company has elected the following practical expedients: modified retrospective basis was applied for all contracts that were not completed as of February 1, 2018; shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are considered fulfillment costs included within cost of sales; and taxes that are collected by the Company from a customer, which are assessed by governmental authorities that are both imposed upon and concurrent with a specific revenue-producing transaction, are excluded from revenues. Additional disclosures related to the revenues arising from contracts with customers as required by Topic 606 are included in Note 5 "Revenue".

~~New Accounting Standards Not Yet Adopted~~

~~In November 2018 the FASB issued ASU~~ No. 2018-18, "Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606" (ASU 2018-18)., issued in November 2018. The amendments in ASU 2018-18 clarify that certain transactions between participants in collaborative arrangements should be accounted for as revenue under Topic 606, "Revenue from Contracts with ~~Customers"~~Customers," and precludes certain transactions that are not with a customer from using Topic 606. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. ~~Early adoption of this guidance is permitted in any interim period.~~ The amendments should be applied retrospectively to the date Topic 606 was adopted. Raven typically does not receive consideration as part of a collaborative arrangement and thereby does not qualify for ASC 606 treatment. However, in instances where consideration is being exchanged for a distinct good or service (unit of account), Raven has naturally elected to apply ASC 606. As such, there was no impact from the adoption of the amendments of ASU 2018-18.

In the fiscal 2020 first quarter, the Company adopted FASB ASU No. 2016-02, "Leases (Topic 842)" (ASU 2016-02), issued in February 2016 and the subsequently-issued codification improvements to Topic 842. The primary difference between previous GAAP and ASU 2016-02 is the recognition of lease assets and liabilities by lessees for leases classified as operating leases under previous GAAP. The guidance requires a lessee to recognize a lease liability (to make lease payments) and a right-of-use asset (representing its right to use the underlying asset for the lease term) on the balance sheet with terms greater than 12 months. The Company ~~is examining specific collaborative~~adopted ASU 2016-02 on a modified retrospective basis for all agreements existing as of February 1, 2019. Prior comparative periods have not been adjusted and continue to ~~determine~~be reported and disclosed under previous lease guidance. This adoption did not have a material impact to the ~~impact, if any,~~Company. As of February 1, 2019, the ~~new guidance will have on~~Company recognized a right-of-use asset for finance leases and operating leases of $233 and $3,807, respectively and a current and non-current lease liability of $1,446 and $2,571, respectively. As part of the ~~Company's consolidated financial statements.~~ adoption of ASU 2016-02, the Company elected the following practical expedient: short-term recognition exemption for all leases that qualify. Note disclosures required in Topic 842 are reported in Note 12 "Leases" of the Notes to the Consolidated Financial Statements in this Form 10-K.

New Accounting Standards Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement" (ASU 2018-13). The amendments in ASU 2018-13 remove, modify and add disclosures for companies required to make disclosures about recurring or nonrecurring fair value measurements under

~~(Dollars in thousands, except per-share amounts)~~

Topic 820. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption of this guidance is ~~permitted, however the Company has the option to delay the adoption of the additional disclosures required until the effective date.~~permitted. Certain amendments in this guidance are required to be applied prospectively, and others are to be applied retrospectively. The ~~Company is evaluating the~~ amendments in ASU 2018-13 ~~to determine when it will adopt~~are disclosure-related only and as such the Company does not expect the adoption of this guidance ~~and the~~to have a significant impact ~~the guidance will have~~ on the balances reported in the Company's ~~disclosures for assets and liabilities reported at fair value on a recurring or nonrecurring basis.~~consolidated financial statements.

In ~~February~~June 2016, the FASB issued ASU ~~No. 2016-02, "Leases~~2016-13, "Financial Instruments - Credit Losses (Topic ~~842)"~~326): Measurement of Credit Losses on Financial Instruments" (ASU ~~2016-02)~~2016-13). ~~The primary difference between previous~~Current GAAP ~~and ASU 2016-02 is the~~generally delays recognition of ~~lease assets~~the full amount of credit losses until the loss is probable of occurring. The amendments in this guidance eliminate the probable initial recognition threshold and, ~~lease liabilities by lessees for those leases classified as operating leases~~instead, reflect an entity’s current estimate of all expected credit losses. Previously, when credit losses were measured under ~~previous GAAP.~~GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The guidance requires a lessee to recognize a lease liability (to make lease payments) and a right-of-use asset (representing its right to use the underlying asset for the lease term) on the balance sheet with terms greater than 12 months. ASU 2016-02new standard is effective for ~~fiscal years~~annual reporting periods beginning after December 15, 2019. All entities may elect to early adopt ASU 2016-13 for annual reporting periods beginning after December 15, 2018. In July 2018 the FASB amended Topic 842 to provide entities additional guidance on transition to adopt using either a modified retrospective approach for leases that exist upon adoption and in the comparative periods presented, or an optional approach to initially apply the new lease guidance upon the adoption date without adjusting the comparative periods presented. The Company has designed necessary internal controls to facilitate the adoption of this new standard. Using the modified retrospective approach, the Company expects to recognize a right-of-use asset and lease liability of approximately $3,900 in the first quarter of fiscal 2020. The adoption of ~~this standard~~ASU 2016-13 is not expected to have a significant impact on the Company's consolidated ~~results of operations.~~financial statements or its note disclosures.

(Dollars in thousands, except per-share amounts)



~~NOTE 2~~	~~SELECTED BALANCE SHEET INFORMATION~~

NOTE 2 SELECTED BALANCE SHEET INFORMATION

Following are the components of selected balance sheet items:


	As of January 31,
	2020		2019
Accounts receivable, net:
Trade accounts	$	56,978	$	53,820
Unbilled receivables	6,954		1,391
Allowance for doubtful accounts	(1,380)		(739)
	$	62,552	$	54,472
Inventories, net:
Finished goods	$	6,309	$	7,629
In process	3,287		1,103
Materials	44,303		45,344
	$	53,899	$	54,076
Other current assets:
Insurance policy benefit	$	38	$	336
Federal income tax receivable	1,370		1,045
Receivable from sale of investment	—		1,055
Prepaid expenses and other	4,028		6,300
	$	5,436	$	8,736
Property, plant and equipment, net^(a):
Land	$	3,117	$	3,234
Buildings and improvements	80,330		81,381
Machinery and equipment	158,354		155,463
Financing lease right-of-use assets	881		—
Accumulated depreciation	(141,832)		(133,724)
	100,850		106,354
Property, plant and equipment subject to capital leases:
Machinery and equipment	—		510
Accumulated amortization for capitalized leases	—		(249)
	$	100,850	$	106,615
Other assets:
Equity investments	$	1,289	$	345
Operating lease right-of-use assets	4,275		—
Deferred income taxes	16		16
Other	1,507		2,963
	$	7,087	$	3,324
Accrued liabilities:
Salaries and related	$	4,188	$	8,244
Benefits	5,339		4,751
Insurance obligations	1,680		1,963
Warranties	2,019		890
Income taxes	293		328
Other taxes	1,734		2,434
Acquisition-related contingent consideration	763		1,796
Lease liability	2,530		—
Other	2,197		3,072
	$	20,743	$	23,478
Other liabilities:
Postretirement benefits	$	8,741	$	7,678
Acquisition-related contingent consideration	2,171		2,376
Lease liability	2,627		—
Deferred income taxes	7,080		1,659
Uncertain tax positions	2,606		2,670
Other	5,936		3,852
	$	29,161	$	18,235

As of January 31,
2019 2018
Accounts receivable, net:
Trade accounts $ 53,820
$ 57,063
Unbilled receivables 1,391
2,447
Allowance for doubtful accounts (739 ) (978 )
$ 54,472
$ 58,532
Inventories:
Finished goods $ 7,629
$ 8,054
In process 1,103
961
Materials 45,344
46,336
$ 54,076
$ 55,351
Other current assets:
Insurance policy benefit $ 336
$ 759
Federal income tax receivable 1,045
1,397
Receivable from sale of investment 1,055
—
Prepaid expenses and other 6,300
3,705
$ 8,736
$ 5,861
Property, plant and equipment, net:
Assets held for use and assets held for sale^(a):

Land $ 3,234
$ 3,234
Buildings and improvements 81,381
80,299
Machinery and equipment 155,463
149,847
Accumulated depreciation (133,724 ) (127,523 )
$ 106,354
$ 105,857
Property, plant and equipment subject to capital leases:
Machinery and equipment $ 510
$ 488
Accumulated amortization for capitalized leases (249 ) (65 )
261
423
$ 106,615
$ 106,280
Other assets:
Equity investments $ 345
$ 1,955
Deferred income taxes 16
19
Other 2,963
976
$ 3,324
$ 2,950
Accrued liabilities:
Salaries and related $ 8,244
$ 9,409
Benefits 4,751
4,225
Insurance obligations 1,963
1,992
Warranties 890
1,163
Income taxes 328
226
Other taxes 2,434
1,880
Acquisition-related contingent consideration 1,796
1,036
Other 3,072
2,015
$ 23,478
$ 21,946
Other liabilities:
Postretirement benefits $ 7,678
$ 8,264
Acquisition-related contingent consideration 2,376
2,010
Deferred income taxes 1,659
615
Uncertain tax positions 2,670
2,634
Other 3,852
272
$ 18,235
$ 13,795

^(a) Includes assets held for use and assets held for sale. The amount of assets ~~and liabilities~~ held for sale as of January 31, ~~2019~~2020, and ~~2018~~January 31, 2019, were not material.

(Dollars in thousands, except per-share amounts)



NOTE 3			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) refers to revenue, expenses, gains, and losses that under GAAP are recorded as an element of shareholders' equity but are excluded from net income. The changes in the components of accumulated other comprehensive income (loss) (AOCI) are shown below:


	Cumulative foreign currency translation adjustment		Postretirement benefits		Total
Balance at January 31, 2018	$	(1,193)	$	(1,380)	$	(2,573)
Other comprehensive (loss) before reclassifications	(1,045)		—		(1,045)
Reclassification due to ASU 2018-02 adoption	—		(280)		(280)
Amounts reclassified from accumulated other comprehensive income (loss) after tax expense of $(99)	—		342		342
Balance at January 31, 2019	(2,238)		(1,318)		(3,556)
Other comprehensive (loss) before reclassifications	(994)		—		(994)
Amounts reclassified from accumulated other comprehensive income (loss) after tax benefit of $251	—		(865)		(865)
Balance at January 31, 2020	$	(3,232)	$	(2,183)	$	(5,415)

Cumulative foreign currency translation adjustment Postretirement benefits Total
Balance at January 31, 2017 $ (2,427 ) $ (1,249 ) $ (3,676 )
Other comprehensive income before reclassifications 1,234
$ —
1,234
Amounts reclassified from accumulated other comprehensive income (loss) after tax benefit of $44 —
(131 ) (131 )
Balance at January 31, 2018 $ (1,193 ) $ (1,380 ) $ (2,573 )
Other comprehensive (loss) before reclassifications (1,045 ) —
(1,045 )
Reclassification due to ASU 2018-02 adoption —
(280 ) (280 )
Amounts reclassified from accumulated other comprehensive income (loss) after tax (expense) of ($99) —
342
342
Balance at January 31, 2019 $ (2,238 ) $ (1,318 ) $ (3,556 )

Postretirement benefit cost components are reclassified in their entirety from accumulated other comprehensive loss to net periodic benefit cost. Net periodic benefit costs are reported in net income in accordance with ASU 2017-07 "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Postretirement Benefit Cost" (ASU 2017-07) further described in Note 1 "Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements. Service cost is reported in net income as ~~“Cost~~"Cost of ~~sales”~~sales" or ~~“Selling,~~"Selling, general, and administrative ~~expenses”~~expenses" in a manner consistent with the classification of direct labor and personnel costs of the eligible employees. ~~Interest~~The components of the net periodic benefit cost, ~~amortization of actuarial gains or losses, and amortization of prior~~other than the service cost iscomponent, are classified as a non-operating expense in "Other income (expense), net" on the Consolidated Statements of Income and Comprehensive Income.



NOTE 4			SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended January 31,
2019 2018 2017
Changes in operating assets and liabilities:
Accounts receivable $ 3,938
$ (7,014 ) $ (5,361 )
Inventories 1,092
(11,062 ) 1,215
Prepaid expenses and other assets (2,440 ) (2,445 ) 228
Accounts payable (4,517 ) 1,280
2,558
Accrued and other liabilities 3,480
2,560
8,405
$ 1,553
$ (16,681 ) $ 7,045

Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes $ 8,225
$ 19,854
$ 6,618
Interest paid $ 227
$ 186
$ 190

Significant non-cash transactions:
Capital expenditures and other intangibles included in accounts payable $ 655
$ 418
$ 84
Assets acquired under capital leases $ 38
$ 79
$ —


	For the years ended January 31,
	2020		2019		2018
Changes in operating assets and liabilities:
Accounts receivable	$	(9,118)	$	3,938	$	(7,014)
Inventories	891		1,092		(11,062)
Prepaid expenses and other assets	2,092		(2,440)		(2,445)
Accounts payable	5,493		(4,517)		1,280
Accrued and other liabilities	(1,894)		3,480		2,560
	$	(2,536)	$	1,553	$	(16,681)

Supplemental disclosures of cash flow information:
Cash paid during the year for income taxes	$	4,377	$	8,225	$	19,854
Interest paid	267		227		186

Significant non-cash transactions:
Capital expenditures and other intangibles included in accounts payable and other liabilities	$	740	$	655	$	418
Redeemable noncontrolling interest included in other liabilities	2,224		—		—
Assets acquired under capital leases	—		38		79
Right-of-use assets obtained in exchange for lease obligations:
Finance leases	$	435	$	—	$	—
Operating leases	1,924		—		—

(Dollars in thousands, except per-share amounts)



NOTE 5			REVENUE

Nature of goods and services

The Company is comprised of ~~three~~3 unique operating divisions, classified into reportable business segments: Applied Technology, Engineered Films, and Aerostar. The following is a description of principal activities, separated by ~~reportable~~ segment, from which the Company generates revenue. Service revenues and contract losses are not material and are not separately disclosed. Furthermore, the Company primarily acts as a principal in transactions and recognizes revenue on a gross basis for which it is entitled from its customers.

Applied Technology

Applied Technology designs, manufactures, sells, and services innovative precision agriculture products and information management tools, which are collectively referred to as precision agriculture equipment, that help farmers reduce costs, more precisely control inputs, and improve farm yields for the global agriculture market. Customers can purchase precision agriculture equipment individually or in large quantities. For purchases made in large quantities, the Company accounts for each piece of equipment separately, as each is a distinct performance obligation from which the customer derives benefit. The stand-alone selling prices are determined based on the prices at which the Company charges other customers for similar products in similar circumstances. Kits or bundles, which can consist of various pieces of equipment, are shipped together and therefore allocation of transaction price does not impact timing of revenue recognition. In the normal course of business the customer agrees to a fixed price and revenue is recognized when control has transferred to the customer.

Engineered Films

Engineered Films produces high-performance plastic films and sheeting for geomembrane, agricultural, construction, and industrial applications and also offers design-build and installation services of these plastic films and sheeting. Plastic film and sheeting can be purchased separately or together with installation services. The majority of transactions within Engineered Films are considered non-customized product-only sales. The Company accounts for each product separately, as each is a distinct performance obligation from which the customer derives benefit. The stand-alone selling prices are determined based on the prices at which the Company charges other customers for similar products in similar circumstances. In the normal course of business, the customer agrees to a fixed price and revenue is recognized when control has transferred to the customer.

The remaining transactions within Engineered Films are related to installation and/or customized product sales. Installation revenues are recognized over time using the cost incurred input method (i.e., costs incurred to date relative to total estimated costs at completion) because of continuous transfer of control to customers. For customized product-only sales, the Company recognizes revenue over time by applying an output method, such as units delivered, to measure progress.

Aerostar

Aerostar serves the ~~aerospace/~~aerospace and defense and commercial lighter-than-air markets. Aerostar's core products include high-altitude stratospheric ~~balloons~~platforms, technical services, and radar systems. These products can be integrated with additional third-party sensors to provide research, communications, and situational awareness capabilities to governmental and commercial customers. Aerostar pursues product and support services contracts with ~~agencies and instrumentalities of the~~ U.S. ~~government.~~government agencies. Product sales to customers for which the division does not continuously transfer control are recognized based on a point-in-time. Contracts with customers which include elements of service, and are considered to be single performance obligations, are recognized over time. The stand-alone selling prices are determined based on the prices at which the Company charges other customers for similar products or services in similar circumstances. In the normal course of business the customer agrees to a fixed price. For revenues recognized at a point-in-time, the Company recognizes revenue when control has transferred to the customer. Certain lighter-than-air contracts are recognized over time using the cost incurred input method. The remaining transactions are recognized over time applying an output method, such as units delivered, to measure progress.

Disaggregation of Revenues

In the following table, revenue is disaggregated by major product category and geography as the Company believes these categories best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The table also includes a reconciliation of the disaggregated revenue ~~with reportable~~for all segments.

(Dollars in thousands, except per-share amounts)


	Revenue by Product Category
	For the year ended January 31, 2020
	ATD		EFD		AERO		ELIM^(a)		Total
Lighter-than-Air
Domestic	$	—	$	—	$	36,535	$	—	$	36,535
International	—		—		52		—		52
Plastic Films & Sheeting
Domestic	—		187,087		—		(90)		186,997
International	—		10,632		—		—		10,632
Precision Agriculture Equipment
Domestic	99,137		—		—		(2)		99,135
International	31,323		—		—		—		31,323
Other
Domestic	—		—		17,731		—		17,731
International	—		—		125		—		125
Totals	$	130,460	$	197,719	$	54,443	$	(92)	$	382,530

	For the year ended January 31, 2019
	ATD		EFD		AERO		ELIM^(a)		Total
Lighter-than-Air
Domestic	$	—	$	—	$	37,866	$	—	$	37,866
International	—		—		932		—		932
Plastic Films & Sheeting
Domestic	—		208,882		—		(512)		208,370
International	—		17,692		—		—		17,692
Precision Agriculture Equipment
Domestic	100,051		—		—		(10)		100,041
International	29,698		—		—		—		29,698
Other
Domestic	—		—		12,062		—		12,062
International	—		—		7		—		7
Totals	$	129,749	$	226,574	$	50,867	$	(522)	$	406,668

	For the year ended January 31, 2018
	ATD		EFD		AERO		ELIM^(a)		Total
Lighter-than-Air
Domestic	$	—	$	—	$	24,956	$	—	$	24,956
International	—		—		93		—		93
Plastic Films & Sheeting
Domestic	—		201,330		—		(584)		200,746
International	—		11,968		—		—		11,968
Precision Agriculture Equipment
Domestic	95,249		—		—		—		95,249
International	29,439		—		—		—		29,439
Other
Domestic	—		—		14,810		—		14,810
International	—		—		56		—		56
Totals	$	124,688	$	213,298	$	39,915	$	(584)	$	377,317

Revenue by Product Category
Twelve months ended January 31, 2019
ATD EFD AERO
ELIM^(a)
Total
Lighter-than-Air
    Domestic $ —
$ —
$ 37,866
$ —
$ 37,866
    International —
—
932
—
932
Plastic Films & Sheeting
    Domestic —
208,882
—
(512 ) 208,370
    International —
17,692
—
—
17,692
Precision Agriculture Equipment
    Domestic 100,051
—
—
(10 ) 100,041
    International 29,698
—
—
—
29,698
Other
    Domestic —
—
12,062
—
12,062
    International —
—
7
—
7
Totals $ 129,749
$ 226,574
$ 50,867
$ (522 ) $ 406,668

Twelve months ended January 31, 2018
ATD EFD AERO
ELIM^(a)
Total
Lighter-than-Air
    Domestic $ —
$ —
$ 24,956
$ —
$ 24,956
    International —
—
93
—
93
Plastic Films & Sheeting
    Domestic —
201,330
—
(584 ) 200,746
    International —
11,968
—
—
11,968
Precision Agriculture Equipment
    Domestic 95,249
—
—
—
95,249
    International 29,439
—
—
—
29,439
Other
    Domestic —
—
14,810
—
14,810
    International —
—
56
—
56
Totals $ 124,688
$ 213,298
$ 39,915
$ (584 ) $ 377,317

Twelve months ended January 31, 2017
ATD EFD AERO
ELIM^(a)
Total
Lighter-than-Air
    Domestic $ —
$ —
$ 17,117
$ —
$ 17,117
    International —
—
357
—
357
Plastic Films & Sheeting
    Domestic —
132,704
—
(789 ) 131,915
    International —
6,151
—
—
6,151
Precision Agriculture Equipment
    Domestic 76,205
—
—
(1 ) 76,204
    International 29,012
—
—
—
29,012
Other
    Domestic —
—
16,631
—
16,631
    International —
—
8
—
8
Totals $ 105,217
$ 138,855
$ 34,113
$ (790 ) $ 277,395

^(a)Intersegment sales for fiscal years 2020, 2019 ~~2018~~ and ~~2017~~2018 were primarily sales from Engineered Films to Aerostar.

(Dollars in thousands, except per-share amounts)

Contract Balances

Contract balances include contract assets and contract liabilities that are recorded when the Company enters into a contract with a customer. Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed (unbilled receivables) at the reporting date, or retainage provisions on billings that have been issued. Contract assets are converted to receivables when the right to collect becomes unconditional. The Company's contract assets reported at January 31, ~~2019~~2020 and ~~2018~~2019 primarily relate to Engineered Films' geomembrane installation services and service contracts for Aerostar's lighter-than air products and radar processing ~~systems.~~ systems. Contract assets are reported in "Accounts receivable, net" in the Consolidated Balance Sheets.

Contract liabilities consist of customer advances and deferred revenue. Contract liabilities primarily relate to consideration received from customers prior to transferring goods or services to the customer. Contract liabilities are reported in "Other current liabilities" in the Consolidated Balance Sheets.

The changes in contract assets and liabilities were as follows:


	January 31, 2020		January 31, 2019		$ Change		% Change
Contract assets	$	7,525	$	2,027	$	5,498	271.2	%

Contract liabilities	$	2,288	$	1,303	$	985	75.6	%

January 31,
2019 January 31,
2018
$
Change
% Change
Contract assets $ 2,027
$ 3,119
$ (1,092 ) (35.0 )%

Contract liabilities $ 1,303
$ 1,890
$ (587 ) (31.1 )%

During the twelve months ended January 31, ~~2019,~~2020, the Company’s contract assets ~~decreased~~increased by ~~$1,092~~$5,498 and contract liabilities ~~decreased~~increased by ~~$587,~~$985, primarily as a result of the contract terms which include timing of customer payments, timing of invoicing, and progress made on open contracts. The Company's contract assets at January 31, ~~2019,~~2020, are primarily unbilled receivables that will ~~convert to billed receivables~~be invoiced in first quarter of next year. The Company's contract liabilities at January 31, ~~2019,~~2020, include customer advances that will substantially all convert to revenue recognized during the next fiscal year. Due to the short-term nature of the Company’s contracts, substantially all of the contract assets that existed as of January 31, ~~2018,~~2019, were converted to accounts receivable. In addition the Company's contract liabilities that existed as of January 31, ~~2018,~~2019, were recognized as revenue during fiscal ~~2019.~~2020.

Remaining performance obligations

As of January 31, ~~2019,~~2020, the Company ~~did not have any~~has 0 remaining performance obligations related to customer contracts that had an original expected duration of one year or more.



NOTE 6			ACQUISITIONS AND INVESTMENTS IN BUSINESSES AND TECHNOLOGIES

Fiscal year 2020 acquisitions

On November 1, 2019, the Company acquired Smart Ag. Smart Agis a technology company located in Ames, Iowa, that develops autonomous farming solutions for agriculture. Smart Agcurrently offers aftermarket retrofit kits to automate farm equipment as well as a platform to connect, manage, and safely operate autonomous agricultural machinery.

On November 13, 2019, the Company acquired a majority ownership in Dot Technology Corp. (DOT). Simultaneously with acquiring this majority ownership, the Company contributed cash to DOT in exchange for additional equity, making the majority ownership percentage in DOT 60% when the transaction closed. DOT is located in Regina, Saskatchewan, Canada, and designs autonomous agriculture solutions and manufactures a unique U-shaped agriculture platform to semi-autonomously handle a large variety of agriculture implements.

Both acquisitions will align under the Company's Applied Technology Division and will complement the division's suite of precision ag products and solutions. The aggregate purchase price was approximately $54,000, excluding the noncontrolling interest. Including the noncontrolling interest, $56,022 of the purchase price was allocated to goodwill. Identifiable intangible assets acquired of $31,800 were primarily indefinite-lived intangible assets for in-process R&D. Amortization of these indefinite-lived intangible assets will start when the current in-process R&D project is complete and the product is commercialized, which is expected to occur in fiscal 2021. Amortization of the indefinite-lived intangibles will be on a straight-line basis over the remaining estimated useful lives of these assets. The Company expects the useful lives will range from seven to ten years.

(Dollars in thousands, except per-share amounts)

The purchase accounting for these acquisitions was substantially complete except for the final valuation of intangible assets and deferred income taxes, as of January 31, 2020, and any adjustments to the purchase accounting will be made within twelve months of the acquisition date.

The aggregate purchase price for these acquisitions was allocated to the estimated fair value of assets acquired and liabilities assumed as follows:


Cash and cash equivalents	$	833
Accounts receivable, net	5
Inventory	963
Other current assets	279
Property, plant and equipment, net	376
Goodwill	56,022
Intangible assets, net	31,800
Other long-term assets	1,394
Deferred income taxes	(4,158)
Accounts payable and other current liabilities	(1,462)
Debt, including lease liabilities for operating leases	(7,587)
Fair value of consideration transferred, including noncontrolling interest	78,465

Less: redeemable noncontrolling interest	24,315
Fair value of purchase price consideration transferred, excluding noncontrolling interest	$	54,150

The following pro forma consolidated condensed financial results of operations are presented as if the acquisitions described above had been completed at the beginning of fiscal 2019 (unaudited):


(Unaudited)
	For the years ended January 31,
	2020		2019
Net sales	$	383,418	$	406,886
Net income attributable to Raven Industries, Inc.	$	29,685	$	48,210

Earnings per common share
Basic	$	0.82	$	1.34
Diluted	$	0.82	$	1.32

These unaudited pro forma consolidated financial results have been prepared for comparative purposes only and include certain adjustments that were not material in nature. The pro forma information does not purport to be indicative of the results of operations that would have resulted had these business combinations occurred at the beginning of each period presented, or of future results of the consolidated entities. Post-acquisition, these acquisitions contributed 0 revenues and reduced fiscal 2020 net income attributable to Raven by $2,279.

Fiscal year 2019 acquisition

On January 1, 2019,, the Company completed the acquisition of substantially all of the assets ("AgSync Acquisition") of AgSync Inc. (AgSync), an Indiana corporation, headquartered in Wakarusa, Indiana. This acquisition was aligned under the Company’s Applied Technology Division and ~~is expected to enhance~~enhanced its ~~Slingshot®~~Slingshot platform by delivering a more seamless logistics solution for ag retailers, aerial applicators, custom applicators and enterprise farms. The AgSync Acquisition constitutes a business and as such was accounted for as a business combination; however, the business combination was not significant enough to warrant pro-forma financial information.

The purchase price was approximately ~~$9,400~~$9,700 which ~~includes~~included potential earn-out payments with an estimated fair value of ~~$1,742~~.$2,052. The earn-out is contingent upon achieving certain revenue milestones. ~~Based on the initial acquisition accounting the~~The purchase price of the business acquired was allocated to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed is reflected as goodwill, which is fully tax deductible. The Company completed the valuation and the purchase price allocation during the first quarter of fiscal 2020. This resulted in an adjustment in the fiscal 2020 first quarter that increased the purchase price and the estimated fair value of the

(Dollars in thousands, except per-share amounts)

contingent earn-out payments by approximately $300. The goodwill and identifiable intangible assets recorded as part of the purchase price allocation at January 31, ~~2019,~~2020, were ~~$4,559~~$4,526 and ~~$5,400,~~$5,700, respectively. ~~The Company expects to complete the purchase price allocation by the end of fiscal 2020.~~

Fiscal year 2018 acquisition

On September 1, 2017,, the Company completed the acquisition of substantially all of the assets ("CLI Acquisition") of Colorado Lining International, Inc. (CLI), a Colorado corporation headquartered in Parker, CO. This acquisition was aligned under the Company’s Engineered Films Division. The acquisition enhanced the Company’s geomembrane market position through extended service and product offerings with the addition of new design-build and installation service components, and advanced Engineered

~~(Dollars in thousands, except per-share amounts)~~

Films’ business model into a vertically-integrated, full-service solutions provider for the geomembrane market. The CLI Acquisition constitutes a business and as such was accounted for as a business combination; however, the business combination was not significant enough to warrant pro-forma financial information.

The CLI Acquisition included a working capital adjustment that was settled in January 2018. The final working capital adjustment was $566 which brought the total purchase price to $14,938. This purchase price included potential earn-out payments with an estimated fair value of $1,256 which are contingent upon achieving certain revenues and operational synergies.

The fair value of the business acquired was allocated to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair value of the identifiable assets acquired and liabilities assumed was reflected as goodwill. Goodwill recorded as part of the purchase price allocation was $5,714, all of which is tax deductible.

Acquisition-related contingent consideration

The Company has contingent liabilities related to the ~~current fiscal year acquisition~~prior acquisitions of AgSync, as well as the prior acquisitions of CLI in September 2017, SBG in May 2014 and ATS in January 2012. The fair value of such contingent consideration is estimated as of the acquisition date, and subsequently at the end of each reporting period, using forecasted cash flows. Projecting future cash flows requires the Company to make significant estimates and assumptions regarding future events, conditions or revenues being achieved under the subject contingent agreement as well as the appropriate discount rate. Such valuation techniques include one or more significant inputs that are not observable (Level 3 fair value measures).

Changes in the fair value of the liability for acquisition-related contingent consideration are as follows:


	For the years ended January 31,
	2020		2019
Beginning balance	$	4,172	$	3,046
Fair value of contingent consideration acquired	310		1,742
Change in fair value of the liability	412		708
Contingent consideration earn-out paid	(1,960)		(1,324)
Ending balance	$	2,934	$	4,172

Classification of liability in the Consolidated Balance Sheets
Accrued Liabilities	$	763	$	1,796
Other Liabilities, long-term	2,171		2,376
Ending balance	$	2,934	$	4,172

For the years ended January 31,
2019 2018
Beginning balance $ 3,046
$ 1,741
Fair value of contingent consideration acquired 1,742
1,256
Change in fair value of the liability 708
457
Contingent consideration earn-out paid (1,324 ) (408 )
Ending balance $ 4,172
$ 3,046

Classification of liability in the Consolidated Balance Sheets
Accrued Liabilities $ 1,796
$ 1,036
Other Liabilities, long-term 2,376
2,010
Ending balance $ 4,172
$ 3,046

As part of the AgSync Acquisition in the ~~current~~prior fiscal year, the Company entered into a contingent earn-out agreement, not to exceed $3,500. The earn-out is to be paid annually over three years after the purchase date, contingent upon achieving certain revenue milestones. The Company has made no0 payments on this potential earn-out liability as of January 31, ~~2019.~~2020.

Related to the CLI Acquisition in ~~the prior~~ fiscal ~~year,~~2018, the Company ~~entered into a contingent~~is committed to making additional earn-out ~~agreement,~~payments, not to exceed ~~$2,000. The earn-out is~~$2,000, calculated and paid annually ~~for~~ three years after the purchase date, contingent upon achieving certain revenues and operational synergies. As of January 31, ~~2019,~~2020, the Company has paid a total of ~~$667~~$1,333 of this potential earn-out liability.

In connection with the acquisition of SBG, Raven is committed to making additional earn-out payments, not to exceed $2,500 calculated and paid quarterly for ten years after the purchase date contingent upon achieving certain revenues. As of January 31, ~~2019,~~2020, the Company has paid a total of ~~$1,336~~$2,237 of this potential earn-out liability.

(Dollars in thousands, except per-share amounts)

Related to the acquisition of ATS in 2012, the Company is committed to making annual payments based upon earn-out percentages on specific revenue streams for seven years after the purchase date. ~~To date,~~The Company made the ~~Company has paid a total of~~ ~~$1,783~~ ~~of this contingent liability and will make its~~ final ~~annual~~ payment in the first quarter of fiscal ~~2020.~~2020 and has 0 further contingent obligations related to acquisition of ATS.



NOTE 7			GOODWILL AND LONG-LIVED ASSETS ~~AND OTHER CHARGES~~

Goodwill

For goodwill, the Company performs impairment reviews by reporting unit. ~~At the end of~~For fiscal 2019, ~~and 2018,~~ the Company determined it had ~~three~~3 reporting units: Applied Technology, Engineered Films, ~~Division, Applied Technology Division,~~ and ~~Aerostar Division.~~Aerostar. In fiscal 2020, the Company determined it had added a 4th reporting unit related to the acquisition of Smart Agand the acquisition of a majority ownership in DOT: Autonomy.

~~(Dollars in thousands, except per-share amounts)~~

The changes in the carrying amount of goodwill by reporting unit are shown below:


	Applied Technology (excluding Autonomy)		Autonomy		Engineered Films		Aerostar		Total
Balance at January 31, 2018	$	12,741	$	—	$	33,232	$	737	$	46,710
Additions due to business combinations	4,559		—		—		—		4,559
Divestiture of business	—		—		—		(103)		(103)
Foreign currency translation adjustment	(224)		—		—		—		(224)
Balance at January 31, 2019	17,076		—		33,232		634		50,942
Additions due to business combinations	(33)		56,022		—		—		55,989

Foreign currency translation adjustment	(100)		(322)		—		—		(422)
Balance at January 31, 2020	$	16,943	$	55,700	$	33,232	$	634	$	106,509

Applied
Technology

Engineered
Films
Aerostar Total
Balance at January 31, 2017 $ 12,342

$ 27,518

$ 789

$ 40,649
Additions due to business combinations —
5,714
—
5,714
Divestiture of business —
—
(52 ) (52 )
Foreign currency translation adjustment 399
—
—
399
Balance at January 31, 2018 12,741

33,232

737

46,710
Additions due to business combinations 4,559
—
—
4,559
Divestiture of business —
—
(103 ) (103 )
Foreign currency translation adjustment (224 ) —
—
(224 )
Balance at January 31, 2019 $ 17,076

$ 33,232

$ 634

$ 50,942

Goodwill gross and net of accumulated impairment losses were as follows:


	As of January 31,
	2020		2019
Gross goodwill	$	118,006	$	62,439
Accumulated impairment loss	(11,497)		(11,497)
Net goodwill	$	106,509	$	50,942

As of January 31,
2019 2018
Gross goodwill $ 62,439
$ 58,207
Accumulated impairment loss (11,497 ) (11,497 )
Net goodwill $ 50,942
$ 46,710


~~UNITED STATES~~☑
~~SECURITIES AND EXCHANGE COMMISSION~~
~~Washington, D.C. 20549~~
~~FORM 10-K~~
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934


~~For the fiscal year ended January 31, 2019~~☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
~~For the transition period from to~~
~~Commission File Number: 001-07982~~
~~RAVEN INDUSTRIES, INC.~~
~~(Exact name of registrant as specified in its charter)~~



~~Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.~~	þ	~~Yes~~	o	No
~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.~~	o	~~Yes~~	þ	No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	þ	~~Yes~~	o	No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).	þ	~~Yes~~	o	No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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.	þ


PART I

~~PART I~~

ITEM 1.	BUSINESS


	For the years ended January 31,														5-Year
Company / Index	2015		2016		2017		2018		2019		2020		CAGR^(a)
Raven Industries, Inc.	$	100.00	$	72.04	$	123.40	$	192.93	$	187.62	$	161.44	10.1	%
Russell 2000 Index	100.00		90.08		120.28		140.95		135.98		148.50		8.2	%
S&P Small Cap 600 Index	100.00		95.31		128.04		149.25		147.39		157.07		9.5	%
^(a)Compound annual growth rate (CAGR)



~~PART II~~

ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES



	Years Ended January 31,												5-Year
Company / Index	2014		2015		2016		2017		2018		2019		CAGR^(a)
Raven Industries, Inc.	$	100.00	$	58.31	$	42.01	$	71.96	$	112.51	$	109.41	1.8	%
Russell 2000 Index	100.00		104.41		94.05		125.58		147.16		141.97		7.3	%
S&P Small Cap 600 Index	100.00		106.15		101.18		135.92		158.43		156.46		9.4	%
^(a)Compound annual growth rate (CAGR)


FIVE-YEAR FINANCIAL SUMMARY	For the years ended January 31,															FIVE-YEAR FINANCIAL SUMMARY	For the years ended January 31,
(In thousands, except employee counts and per-share amounts)	2019			2018			2017			2016			2015			(In thousands, except employee counts and per-share amounts)	2020			2019			2018			2017			2016
OPERATIONS																OPERATIONS
Net sales^(a)	$	406,668		$	377,317		$	277,395		$	258,229		$	378,153		Net sales^(a)	$	382,530		$	406,668		$	377,317		$	277,395		$	258,229
Gross profit^(b)	132,549			121,565			78,190			66,974			103,246			Gross profit^(b)	123,747			132,549			121,565			78,190			66,974
Operating income^(b)(c)	55,133			59,170			28,413			4,391			43,801			Operating income^(b)(c)	39,939			55,133			59,170			28,413			4,391
Income before income taxes^(b)(d)	61,570			58,986			27,853			4,081			43,501			Income before income taxes^(b)(d)	40,034			61,570			58,986			27,853			4,081
Net income attributable to Raven Industries, Inc.^(e)	51,794			41,022			20,191			4,776			31,733			Net income attributable to Raven Industries, Inc.^(e)	35,196			51,794			41,022			20,191			4,776
Net income % of sales	12.7		%	10.9		%	7.3		%	1.8		%	8.4		%	Net income % of sales	9.2		%	12.7		%	10.9		%	7.3		%	1.8		%
Net income % of average equity^(f)	17.7		%	15.3		%	7.7		%	1.7		%	11.4		%	Net income % of average equity^(f)	11.3		%	17.7		%	15.3		%	7.7		%	1.7		%
FINANCIAL POSITION																FINANCIAL POSITION
Cash and cash equivalents	$	65,787		$	40,535		$	50,648		$	33,782		$	51,949		Cash and cash equivalents	$	20,707		$	65,787		$	40,535		$	50,648		$	33,782
Property, plant and equipment	106,615			106,280			106,324			115,704			117,513			Property, plant and equipment	100,850			106,615			106,280			106,324			115,704
Total assets	360,245			326,803			301,509			298,688			362,873			Total assets	403,257			360,245			326,803			301,509			298,688
Total debt (including capital lease obligations)	284			448			—			—			—
Total debt (including liabilities for financing leases/capital lease obligations - see Note 12)																Total debt (including liabilities for financing leases/capital lease obligations - see Note 12)	740			284			448			—			—
Raven Industries, Inc. shareholders' equity	308,955			276,064			259,426			264,155			305,153			Raven Industries, Inc. shareholders' equity	314,646			308,955			276,064			259,426			264,155
Net working capital^(g)	100,276			100,777			77,012			77,870			100,183			Net working capital^(g)	101,558			100,276			100,777			77,012			77,870
Net working capital percentage^(h)	28.5		%	26.3		%	27.9		%	36.9		%	27.9		%	Net working capital percentage^(h)	29.6		%	28.5		%	26.3		%	27.9		%	36.9		%
Long-term debt / total capitalization	0.1		%	0.2		%	—		%	—		%	—		%	Long-term debt / total capitalization	0.2		%	0.1		%	0.2		%	—		%	—		%
CASH FLOWS PROVIDED BY (USED IN)																CASH FLOWS PROVIDED BY (USED IN)
Operating activities	$	65,952		$	44,961		$	48,636		$	44,008		$	60,083		Operating activities	$	54,872		$	65,952		$	44,961		$	48,636		$	44,008
Investing activities	(16,444		)	(25,675		)	(4,642		)	(11,074		)	(29,986		)	Investing activities	(58,609)			(16,444)			(25,675)			(4,642)			(11,074)
Financing activities	(23,755		)	(29,721		)	(27,151		)	(50,684		)	(30,665		)	Financing activities	(40,887)			(23,755)			(29,721)			(27,151)			(50,684)
Change in cash and cash equivalents	25,252			(10,113		)	16,866			(18,167		)	(1,038		)	Change in cash and cash equivalents	(45,080)			25,252			(10,113)			16,866			(18,167)
COMMON STOCK DATA																COMMON STOCK DATA
EPS — basic	$	1.44		$	1.14		$	0.56		$	0.13		$	0.86		EPS — basic	$	0.98		$	1.44		$	1.14		$	0.56		$	0.13
EPS — diluted	1.42			1.13			0.56			0.13			0.86			EPS — diluted	0.97			1.42			1.13			0.56			0.13
Cash dividends per share	0.52			0.52			0.52			0.52			0.50			Cash dividends per share	0.52			0.52			0.52			0.52			0.52
Stock price range during the year																Stock price range during the year
High	$	49.80		$	40.85		$	26.90		$	22.85		$	40.06		High	$	41.39		$	49.80		$	40.85		$	26.90		$	22.85
Low	31.45			23.75			12.88			13.87			20.75			Low	27.32			31.45			23.75			12.88			13.87
Close	36.99			38.55			25.05			15.01			21.44			Close	31.36			36.99			38.55			25.05			15.01
OTHER DATA																OTHER DATA
Price / earnings ratio⁽ⁱ⁾	26.0			34.1			44.7			115.5			24.9			Price / earnings ratio⁽ⁱ⁾	32.3			26.0			34.1			44.7			115.5
Average number of employees	1,219			1,054			907			936			1,251			Average number of employees	1,302			1,219			1,054			907			936
Sales per employee	$	334		$	358		$	306		$	276		$	302		Sales per employee	$	294		$	334		$	358		$	306		$	276



ITEM 7.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


•	~~Sales volume and selling prices.~~ Geographically, domestic and international sales were up 5.0% and 0.9% year-over-year, respectively. Higher sales volume of both new and existing products, rather than an increase in selling price, was the primary driver of this increase.


•	International sales. Net sales outside the U.S. accounted for 22.9% of segment sales in fiscal 2019 compared to 23.6% in fiscal 2018. International sales of $29.7 ~~million in fiscal 2019 increased $0.3 million, or 0.9%, compared to fiscal 2018. The year-over-year increases in Europe and Latin America were mostly offset by a decrease in Canada.~~


•	~~Market conditions.~~ ~~Conditions in the agriculture market remained subdued; however, Applied Technology's marketplace~~


•	~~Sales volume and selling prices.~~ Geographically, domestic and international sales were up 25.0% and 1.5% year-over-year, respectively. Higher sales volume and growth in new product sales, rather than an increase in selling price, were the primary drivers for these increases.


•	~~Gross margin.~~ Gross margin increased from 41.3% in fiscal 2017 to 43.9% in fiscal 2018. Higher sales volume and lower manufacturing costs increased operating leverage and drove the increase in gross margin. Due to the existing available capacity of the manufacturing facilities, the increase in sales volume did not require a commensurate increase in costs in fiscal 2018.


•	~~Operating expenses.~~ Fiscal 2018 operating expenses were 18.6% of net sales compared to 16.0% for the prior year. Throughout fiscal 2018, the division continued to invest in research and development activities to position itself for incremental new product sales and market share gains in future years.



ITEM 1A.			RISK FACTORS



ITEM 1B.			UNRESOLVED STAFF COMMENTS



ITEM 2.			PROPERTIES



ITEM 3.			LEGAL PROCEEDINGS


•	~~Gross margin.~~ Fiscal 2019 gross margin was 21.0%, 5.4 percentage points lower than the prior fiscal year. The decrease in gross margin percentage was led by lower plant utilization from the reduction in hurricane recovery film sales, a higher


•	•Operating expenses. Fiscal 2019 operating expenses, as a percentage of ~~net sales, decreased to 3.5%, from 4.2% in the prior year. The division reduced selling expenses while sales grew year-over-year.~~


•	~~Sales volume and selling prices~~. Primary drivers of the increase in net sales were the improved end-market conditions, the acquisition of CLI, and the delivery of hurricane recovery film, which added $2.3 million, $7.9 million and $15.8 million, in the fourth quarter of fiscal 2018, and $34.9 million, $13.1 million and $24.2 million, in the 2018 full fiscal year, respectively.


•	~~Operating expenses.~~ ~~Fiscal 2018 operating expenses, as a percentage of net sales, decreased to 4.2%, from 4.6% in the prior year. The year-over-year decrease in operating expenses was led by lower selling expenses.~~


•	~~Sales volume.~~ ~~The increase was principally driven by higher sales of stratospheric balloons and radar systems.~~


•	~~Gross margin.~~ For fiscal 2018, gross margin increased 11.0 percentage points compared to the prior fiscal year. The improved profitability was driven by higher sales volume, and the absence of inventory write-downs, which lowered prior year results by $2.3 million.


•	~~Operating expenses.~~ Operating expenses as a percentage of net sales decreased 3.7 percentage points compared to prior fiscal year. Fiscal 2018 operating expenses were $6.5 million, or 16.2% of net sales, compared to operating expenses of $6.8 million, or 19.9% of net sales in fiscal 2017.



ITEM 7A.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





	$1 Par Common Stock		Paid-in Capital			Treasury Stock				Retained Earnings			Accumulated Other Comprehen-sive Income (Loss)			Raven Industries, Inc. Equity			Non-controlling Interest			Total Equity
						Shares	Cost
Balance January 31, 2016	$	67,006	$	53,907		30,500	$	(82,700	)	$	229,443		$	(3,501	)	$	264,155		$	74		$	264,229
Net income	—		—			—	—			20,191			—			20,191			1			20,192
Other comprehensive (loss), net of income tax	—		—			—	—			—			(175		)	(175		)	—			(175		)
Cash dividends ($0.52 per share)	—		216			—	—			(18,985		)	—			(18,769		)	—			(18,769		)
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest	—		—			—	—			—			—			—			(70		)	(70		)
Director shares issued	19		(19		)	—	—			—			—			—			—			—
Shares issued on vesting of stock units, net of shares withheld for employee taxes	35		(291		)	—	—			—			—			(256		)	—			(256		)
Shares repurchased	—		—			484	(7,702		)	—			—			(7,702		)	—			(7,702		)
Share-based compensation	—		3,071			—	—			—			—			3,071			—			3,071
Income tax impact related to share-based compensation	—		(1,089		)	—	—			—			—			(1,089		)	—			(1,089		)
Balance January 31, 2017	67,060		55,795			30,984	(90,402		)	230,649			(3,676		)	259,426			5			259,431
Net income	—		—			—	—			41,022			—			41,022			(3		)	41,019
Other comprehensive income, net of income tax	—		—			—	—			—			1,103			1,103			—			1,103
Cash dividends ($0.52 per share)	—		214			—	—			(18,899		)	—			(18,685		)	—			(18,685		)
Director shares issued	26		(26		)	—	—			—			—			—			—			—
Shares issued on stock options exercised, net of shares withheld for employee taxes	21		(311		)	—	—			—			—			(290		)	—			(290		)
Shares issued on vesting of stock units, net of shares withheld for employee taxes	17		(254		)	—	—			—			—			(237		)	—			(237		)
Shares repurchased	—		—			348	(10,000		)	—			—			(10,000		)	—			(10,000		)
Share-based compensation	—		3,725			—	—			—			—			3,725			—			3,725
Balance January 31, 2018	67,124		59,143			31,332	(100,402		)	252,772			(2,573		)	276,064			2			276,066
Net income	—		—			—	—			51,794			—			51,794			79			51,873
Other comprehensive (loss), net of income tax	—		—			—	—			—			(703		)	(703		)	—			(703		)
Reclassification due to ASU 2018-02 adoption	—		—			—	—			280			(280		)	—			—			—
Cash dividends ($0.52 per share)	—		203			—	—			(18,877		)	—			(18,674		)	—			(18,674		)
Dividends of less than wholly-owned subsidiary paid to noncontrolling interest	—		—			—	—			—			—			—			(79		)	(79		)
Shares issued on stock options exercised, net of shares withheld for employee taxes	113		(2,750		)	—	—			—			—			(2,637		)	—			(2,637		)
Shares issued on vesting of stock units, net of shares withheld for employee taxes	52		(892		)	—	—			—			—			(840		)	—			(840		)
Share-based compensation	—		3,951			—	—			—			—			3,951			—			3,951
Balance January 31, 2019	$	67,289	$	59,655		31,332	$	(100,402	)	$	285,969		$	(3,556	)	$	308,955		$	2		$	308,957

The accompanying notes are an integral part of the consolidated financial statements.



	Revenue by Product Category
	Twelve months ended January 31, 2019
	ATD		EFD		AERO		ELIM^(a)			Total
Lighter-than-Air
Domestic	$	—	$	—	$	37,866	$	—		$	37,866
International	—		—		932		—			932
Plastic Films & Sheeting
Domestic	—		208,882		—		(512		)	208,370
International	—		17,692		—		—			17,692
Precision Agriculture Equipment
Domestic	100,051		—		—		(10		)	100,041
International	29,698		—		—		—			29,698
Other
Domestic	—		—		12,062		—			12,062
International	—		—		7		—			7
Totals	$	129,749	$	226,574	$	50,867	$	(522	)	$	406,668

	Twelve months ended January 31, 2018
	ATD		EFD		AERO		ELIM^(a)			Total
Lighter-than-Air
Domestic	$	—	$	—	$	24,956	$	—		$	24,956
International	—		—		93		—			93
Plastic Films & Sheeting
Domestic	—		201,330		—		(584		)	200,746
International	—		11,968		—		—			11,968
Precision Agriculture Equipment
Domestic	95,249		—		—		—			95,249
International	29,439		—		—		—			29,439
Other
Domestic	—		—		14,810		—			14,810
International	—		—		56		—			56
Totals	$	124,688	$	213,298	$	39,915	$	(584	)	$	377,317

	Twelve months ended January 31, 2017
	ATD		EFD		AERO		ELIM^(a)			Total
Lighter-than-Air
Domestic	$	—	$	—	$	17,117	$	—		$	17,117
International	—		—		357		—			357
Plastic Films & Sheeting
Domestic	—		132,704		—		(789		)	131,915
International	—		6,151		—		—			6,151
Precision Agriculture Equipment
Domestic	76,205		—		—		(1		)	76,204
International	29,012		—		—		—			29,012
Other
Domestic	—		—		16,631		—			16,631
International	—		—		8		—			8
Totals	$	105,217	$	138,855	$	34,113	$	(790	)	$	277,395



	January 31, 2019		January 31, 2018		$ Change			% Change
Contract assets	$	2,027	$	3,119	$	(1,092	)	(35.0	)%

Contract liabilities	$	1,303	$	1,890	$	(587	)	(31.1	)%



	Applied Technology			Engineered Films		Aerostar			Total
Balance at January 31, 2017	$	12,342		$	27,518	$	789		$	40,649
Additions due to business combinations	—			5,714		—			5,714
Divestiture of business	—			—		(52		)	(52		)
Foreign currency translation adjustment	399			—		—			399
Balance at January 31, 2018	12,741			33,232		737			46,710
Additions due to business combinations	4,559			—		—			4,559
Divestiture of business	—			—		(103		)	(103		)
Foreign currency translation adjustment	(224		)	—		—			(224		)
Balance at January 31, 2019	$	17,076		$	33,232	$	634		$	50,942



	2020		2021		2022		2023		2024
Estimated amortization expense	$	2,425	$	2,358	$	2,300	$	2,235	$	1,711



	For the years ended January 31, 2019
	2019			2018			2017
Current expense (benefit):
Federal	$	6,910		$	17,057		$	6,375
State	1,099			1,549			591
Foreign	735			148			388
	8,744			18,754			7,354
Deferred expense (benefit):
Federal	1,018			(613		)	330
State	73			(13		)	14
Foreign	(138		)	(161		)	(37		)
	953			(787		)	307
Income tax expense	$	9,697		$	17,967		$	7,661


	For the Year Ended January 31, 2020
Lease Costs:
Finance Leases
Depreciation of right-of-use assets	$	413
Interest on lease liabilities	21
Total finance lease cost	$	434

Operating Leases
Operating lease cost	$	1,536
Short-term lease cost	446
Total operating lease cost	1,982
Total finance and operating lease cost	$	2,416


	As of January 31, 2020
Operating Leases
Operating lease right-of-use assets	$	4,275

Current lease liability	$	2,272
Non-current lease liability	2,370
Total operating lease liabilities	$	4,642

Finance Leases
Property, plant and equipment, at cost	$	881
Accumulated depreciation	(366)
Property, plant and equipment, net	$	515

Current lease liability	$	258
Non-current lease liability	257
Total finance lease liabilities	$	515


	As of January 31, 2020
Weighted Average Remaining Lease Term:
Operating leases	4 years
Finance leases	2 years
Weighted Average Discount Rate:
Operating leases	3.5	%
Finance leases	3.5	%


	For The Year Ended January 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,536
Operating cash flows from finance leases	$	21
Financing cash flows from finance leases	$	413


	As of January 31, 2020
	Operating Leases		Capital Leases
Fiscal 2020	$	2,213	$	182
Fiscal 2021	1,939		102
Fiscal 2022	728		44
Fiscal 2023	356		2
Fiscal 2024	140		—
Thereafter	—		—
Total lease payments	$	5,376	330
Less amount representing estimated executory costs such as taxes, license and insurance including profit thereon			(14)
Less amounts representing interest			(32)
Present value of net minimum lease payments			$	284


	Number of options	Weighted average exercise price		Aggregate intrinsic value		Weighted average remaining contractual term (years)
Outstanding, January 31, 2019	368,130	$	23.06
Granted	—	—
Exercised	(146,145)	20.30


Forfeited	(7,725)	20.62
Outstanding, January 31, 2020	214,260	$	25.03	$	1,564	2.00

Outstanding exercisable, January 31, 2020	76,879	$	24.18	$	603	1.85

Options vested, or expected to vest, January 31, 2020	214,260	$	25.03	$	1,564	2.00