FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: OCTOBER 31, 1999APRIL 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________________________________________
Commission file number: 0-3136
RAVEN INDUSTRIES, INC.
------------------------------------------------------------------ --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 46-0246171
- ------------------------------------ --------------------------------------------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
205 EAST 6TH STREET
P.O. BOX 5107
SIOUX FALLS, SD 57117-5107
------------------------------------------------------------------ --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
605-336-2750
--------------------------------------------- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X_____X___ No ____________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF 11/30/99MAY 31, 2000
- ---------------------------- ---------------------------------------------------------------------- ------------------------------------------
Common Stock 4,051,0823,563,407 shares
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
--------
PART I-FINANCIAL INFORMATION
Consolidated Balance SheetsSheet as of October 31, 1999,April 30, 2000,
January 31, 19992000 and October 31, 1998April 30, 1999 3
Consolidated StatementsStatement of Income for the three months
ended April 30, 2000 and nine month periods ended October 31, 1999 and 1998 4
Consolidated StatementsStatement of Cash Flows for the
nine
month periodsthree months ended October 31,April 30, 2000 and 1999 and 1998 5
Notes to Consolidated Financial Statements 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-108-9
PART II-OTHER INFORMATION 1110
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DollarsSHEET
Dollars in thousands, except per share data)data
10/04/30/00 01/31/00 04/30/99
01/31/99 10/31/98
----------- ----------- ------------------- -------- --------
(unaudited) (unaudited)
ASSETS
- ------
Cash and cash equivalents .................................................................................. $ 4,5571,866 $ 5,3355,707 $ 2,9322,055
Accounts and notesnote receivable, less allowance for
doubtful accounts of $502, $400$461,000, $400,000 and $400$401,000 as of
10/04/30/00, 01/31/00 and 04/30/99, 01/31/99 and 10/31/98, respectively .............................. 31,339 27,399 26,841
Inventories:.................. 22,687 22,717 24,272
Inventories, net:
Materials ........................................................ 19,270 18,261 18,528...................................................... 17,417 16,260 20,419
In process ....................................................... 4,702 3,662 5,380..................................................... 6,232 4,997 5,204
Finished goods ................................................... 3,366 4,055 5,716
----------- ----------- -----------................................................. 3,538 3,205 6,010
-------- -------- --------
Total inventories, ............................................ 27,338 25,978 29,624net ..................................... 27,187 24,462 31,633
Deferred income taxes .............................................. 2,161 1,732 1,682............................................ 2,010 1,919 1,132
Prepaid expenses and other current assets .......................... 309 417 391
----------- ----------- -----------........................ 536 566 269
-------- -------- --------
Total current assets ......................................... 65,704 60,861 61,470
----------- ----------- -----------....................................... 54,286 55,371 59,361
Property, plant and equipment ...................................... 49,691 57,276 56,573
Less:.................................... 49,552 48,949 58,058
Less accumulated depreciation ................................... 34,848 37,713 37,311
----------- ----------- -----------
Net property,.................................. 34,893 33,881 39,007
-------- -------- --------
Property, plant and equipment, ............................ 14,843 19,563 19,262
Note receivable, less current portion .............................. 1,418net ......................... 14,659 15,068 19,051
Other assets, net .................................................. 3,017 3,250 3,338
----------- ----------- -----------
TOTAL ASSETS ....................................................................................................... 3,592 3,608 3,734
-------- -------- --------
Total assets ..................................................... $ 83,56472,537 $ 83,67474,047 $ 85,488
=========== =========== ===========82,146
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current portion of long-term debt .................................................................. $ 1,55533 $ 1,0601,044 $ 1,645608
Accounts payable ................................................... 7,029 5,993 6,260................................................. 5,969 5,320 5,418
Accrued liabilities and customer advances .......................... 12,278 9,739 11,129
----------- ----------- -----------........................ 8,941 8,338 8,792
-------- -------- --------
Total current liabilities .................................... 20,862 16,792 19,034.................................. 14,943 14,702 14,818
Long-term debt, less current portion ............................................................ 3,012 3,024 4,572 4,512
Deferred income taxes .............................................. 17 5243,992
Other liabilities, primarily compensation and benefits ........... 1,987 1,802 1,775
Commitments and contingencies
Stockholders' equity
Common stock, $1$1.00 par value, authorized shares:
100,000,000;100,000,000 issued: 5,215,489;5,218,114; 5,218,114 and 5,215,489 and 5,214,989 shares
as of 10/04/30/00, 01/31/00 and 04/30/99, 01/31/99 and 10/31/98, respectively .............................. 5,218 5,218 5,215
5,215 5,215
Paid inPaid-in capital .................................................................................................. 3,177 3,177 2,961 2,940 2,917
Retained earnings ................................................ 63,665 60,369 59,517
----------- ----------- -----------
71,841 68,524 67,649.............................................. 65,259 64,236 61,060
-------- -------- --------
73,654 72,631 69,236
Less treasury stock, at cost:
909,848; 521,403cost
1,522,707; 1,302,007 and 521,403623,203 shares as of 10/04/30/00,
01/31/00 and 04/30/99, 01/31/99 and 10/31/98, respectively .......................... 12,163 6,231 6,231
----------- ----------- -----------........................ 21,059 18,112 7,675
-------- -------- --------
Total stockholders' equity ................................... 59,678 62,293 61,418
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .......................................................... 52,595 54,519 61,561
-------- -------- --------
Total liabilities and stockholders' equity ....................... $ 83,56472,537 $ 83,67474,047 $ 85,488
=========== =========== ===========82,146
======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 3
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTSSTATEMENT OF INCOME
(UNAUDITED)
(DollarsDollars in thousands, except per share data)
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
----------------------- -----------------------
10/31/99 10/31/98 10/31/99 10/31/98
--------- --------- --------- ---------
Net sales ................................ $ 44,971 $ 44,787 $ 116,431 $ 113,157
Cost of goods sold ....................... 38,486 37,746 97,347 94,664
--------- --------- --------- ---------
Gross profit ........................... 6,485 7,041 19,084 18,493
Operating expenses
Selling ................................ 2,051 2,219 6,043 6,330
Administrative ......................... 1,811 1,625 5,357 4,977
Gain on sale of assets ................. (966) (966)
--------- --------- --------- ---------
Operating income .................... 3,589 3,197 8,650 7,186
Interest expense ......................... (141) (127) (333) (355)
Other income, net ........................ 79 132 304 312
--------- --------- --------- ---------
Income before income taxes ............. 3,527 3,202 8,621 7,143
Income taxes ............................. 1,273 1,149 3,112 2,564
--------- --------- --------- ---------
Net income ............................. $ 2,254 $ 2,053 $ 5,509 $ 4,579
========= ========= ========= =========
Net income per common share:
Basic ............................ $ 0.52 $ 0.44 $ 1.22 $ 0.96
Diluted .......................... $ 0.52 $ 0.44 $ 1.22 $ 0.96
Cash dividends paid per share ............data
FOR THE THREE
MONTHS ENDED:
-----------------------
04/30/00 04/30/99
--------- ---------
Net sales ...................................... $ 31,544 $ 34,495
Cost of goods sold ............................. 25,277 28,484
--------- ---------
Gross profit ................................. 6,267 6,011
Operating expenses
Selling ...................................... 1,774 1,972
Administrative ............................... 1,894 1,781
--------- ---------
Operating income .......................... 2,599 2,258
Interest expense ............................... (57) (103)
Other income, net .............................. 79 97
--------- ---------
Income before income taxes ................... 2,621 2,252
Income taxes ................................... 944 813
--------- ---------
Net income ................................... $ 1,677 $ 1,439
========= =========
Net income per common share:
Basic ................................. $ 0.44 $ 0.31
Diluted ............................... $ 0.44 $ 0.31
Cash dividends declared and paid per share ..... $ 0.17 $ 0.16 $ 0.49 $ 0.48
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 4
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTSSTATEMENT OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
FOR THE NINETHREE
MONTHS ENDED
-------------------------
10/31/ENDED:
---------------------
04/30/00 04/30/99
10/31/98
---------- ------------------ --------
Cash flows from operating activities:activities
Net income ........................................................................................................ $ 5,5091,677 $ 4,5791,439
Adjustments to reconcile net income to net
cash provided by operating activities:activities
Depreciation and amortization ................................ 4,074 4,045.......................... 1,098 1,380
Provision for losses on accounts receivable .................. 232 111
Gain on sale of assets ....................................... (966)............ 139 2
Deferred income taxes ........................................ (492).................................. (161) 4
Interest earned on note receivable ........................... (79) (159)
Change in accounts and interest receivable ................................ (5,661) 21............. (266) 3,125
Change in inventories ........................................ (3,112) (3,808).................................. (2,725) (5,655)
Change in prepaid expenses and other current assets .......... 85 115.... 30 148
Change in operating liabilities .............................. 3,196 (221)........................ 1,503 273
Other ........................................................ (21) 3
---------- ----------.................................................. (17)
-------- --------
Net cash provided by operating activities ........................ 2,765 4,690
---------- ----------.................. 1,295 699
Cash flows from investing activities:activities
Capital expenditures ............................................. (2,619) (3,225)
Sale....................................... (603) (782)
Proceeds from the sale of Glasstite assets net of cash sold $135 thousand ................... 8,228................. 157
Other ............................................................ 45 76
---------- ----------...................................................... (66) 27
-------- --------
Net cash provided by (used in)used in investing activities .............. 5,654 (3,149)
---------- ----------...................... (512) (755)
Cash flows from financing activities:
Issuance of short-term debt ...................................... 6,000 4,000
Payment of short-term debt ....................................... (6,000) (4,000)
Issuance of long-term debt ....................................... 5,000activities
Long-term debt principal payments ................................ (1,053) (1,736)
Net proceeds from exercise of stock options ...................... 77.......................... (1,023) (1,032)
Dividends paid ................................................... (2,212) (2,192)............................................. (654) (748)
Purchase of treasury stock ....................................... (5,932) (2,608)
---------- ----------................................. (2,947) (1,444)
-------- --------
Net cash provided by (used in)used in financing activities .............. (9,197) (1,459)
---------- ----------...................... (4,624) (3,224)
-------- --------
Net increase (decrease)decrease in cash and cash equivalents .................. (778) 82(3,841) (3,280)
Cash and cash equivalents at beginning of period ................................ 5,707 5,335
2,850
---------- ------------------ --------
Cash and cash equivalents at end of period ............................................ $ 4,5571,866 $ 2,932
========== ==========
Cash paid during the period for:
Interest ....................................................... $ 318 $ 330
Income taxes, net of refund .................................... $ 3,431 $ 2,8032,055
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS.
Page 5
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. The accompanying unaudited consolidated financial statements have been
prepared by Raven Industries, Inc. (the company) in accordance with
accounting principles generally accepted accounting principlesin the United States for interim
financial information and with the instructions to Formform 10-Q and Article 10 of
Regulation S-X of the Securities and Exchange Commission (SEC).
Accordingly, they do not include all of the information and footnotesnotes required
by accounting principles generally accepted accounting principlesin the United States for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. OperatingFinancial results for
the three and nine-month periodsthree-month period ended October 31, 1999April 30, 2000 are not necessarily indicative
of the results that may be be expected for the year ending January 31, 2000. For further information, refer to2001. The
January 31, 2000 consolidated balance sheet was derived from audited
financial statements, but does not include all consolidated disclosure
required by accounting principles generally accepted in the United States.
These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the company's
Annual
Reportannual report on Form 10-K for the year ended January 31, 1999.2000.
2. Certain outstandingreclassifications have been made to the April 30, 1999 balance
sheet to conform to the current year presentation. These reclassifications
had no impact on stockholders' equity or the company's results of
operations.
3. 269,800 and 242,100 options for the three and nine month periods ended
10/31/99 and 10/31/98, were excluded from the diluted earnings per share
calculationscalculation on April 30, 1999 and April 30, 2000, respectively, because
their exerciseexcercise prices were greater than the average market price of the
company's common stock during those periods.the period. Details of the earnings per share
computation are presented below (in(dollars in thousands, except per share
data):
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
------------------------ ------------------------
10/31/99 10/31/98 10/31/99 10/31/98
---------- ---------- ---------- ----------
Net income ....................................... $ 2,254 $ 2,053 $ 5,509 $ 4,579.
FOR THE THREE
MONTHS ENDED:
------------------------
04/30/00 04/30/99
---------- ----------
Net income ............................... $ 1,677 $ 1,439
========== ==========
Weighted average common shares
outstanding ............................ 3,823,361 4,652,019
Dilutive impact of stock options ......... 0 0
---------- ----------
Weighted average common and common
equivalent shares outstanding .......... 3,823,361 4,652,019
========== ==========
Net income per share
Basic ................................ $ 0.44 $ 0.31
========== ==========
Diluted .............................. $ 0.44 $ 0.31
========== ========== ========== ==========
Weighted average common shares outstanding ....... 4,332,108 4,705,531 4,498,194 4,770,460
Dilutive impact of stock options ................. 739 0 0 8,111
---------- ---------- ---------- ----------
Weighted average common and common
equivalent shares outstanding .................. 4,332,847 4,705,531 4,498,194 4,778,571
========== ========== ========== ==========
Net income per share:
Basic ....................................... $ 0.52 $ 0.44 $ 1.22 $ 0.96
========== ========== ========== ==========
Diluted ..................................... $ 0.52 $ 0.44 $ 1.22 $ 0.96
========== ========== ========== ==========
Page 6
PART I - FINANCIAL INFORMATION
RAVEN INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3.4. The company's three reportable segments (Electronics, Plastics and Sewn
Products) are based upondefined by their common technologies, raw materials, and
production processes. These segments are consistent with the company's
management reporting structure. The company's customers (distributors or
original equipment manufacturers) provide opportunities for each segment to
serve various markets. Distribution methods are similar across and within
segments. These segments, whosesegments' results are shown below, arebelow.
FOR THE THREE
MONTHS ENDED:
-----------------------
04/30/00 04/30/99
--------- ---------
NET SALES
---------
Electronics whose principal products include industrial controls, computerized flow
control hardware and software and printed circuit boards and assemblies;................. $ 14,121 $ 12,917
Plastics providing plastic films, large-volume plastic and fiberglass
tanks and fiberglass pick-up truck toppers; and.................... 13,965 18,610
Sewn Products providing
superior-performance outerwear and sewn inflatables including hot-air
balloons.
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
---------------------- ----------------------
10/31/99 10/31/98 10/31/99 10/31/98
--------- --------- --------- ---------
NET SALES
---------
Electronics .................... $ 12,181 $ 11,503 $ 37,015 $ 34,748
Plastics ....................... 19,991 19,178 57,969 52,516
Sewn Products .................. 12,799 14,106 21,447 25,893
--------- --------- --------- ---------
TOTAL COMPANY ..................... $ 44,971 $ 44,787 $ 116,431 $ 113,157
========= ========= ========= =========
OPERATING INCOME
----------------
Electronics .................... $ 679 $ 872 $ 2,261 $ 3,110
Plastics ....................... 2,599 1,564 5,874 3,194
Sewn Products .................. 311 761 515 882
--------- --------- --------- ---------
TOTAL COMPANY ..................... $ 3,589 $ 3,197 $ 8,650 $ 7,186
========= =========............... 3,458 2,968
--------- ---------
Total company ................. $ 31,544 $ 34,495
========= =========
4. On October 29, 1999,OPERATING INCOME
----------------
Electronics ................. $ 1,457 $ 866
Plastics .................... 1,325 1,575
Sewn Products ............... (183) (183)
--------- ---------
Total company ................. $ 2,599 $ 2,258
========= =========
5. During the first quarter of fiscal 2001, the company sold the assetsrepaid $1.0 million of
its Glasstite
subsidiary to Penda Corporation resultingdebt originally due in a pretax gain of $966,000. The
gain on the sale reflects an estimate for the cost of remedial actions on
certain environmental concerns. At the closing, the company received $8.4
million in cash and delivered all tangible and intangible assets of the
subsidiary, including $135,000 of cash, netting to $8.2 million of cash
received. In addition, the company has receivable for certain working
capital adjustments yet to be finalized, and the buyer assumed certain
liabilities.June 2000.
Page 7
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
On October 29, 1999, the company sold the assets of its Glasstite subsidiary for
$8.4 million cash. In addition, the company has a receivable for certain working
capital adjustments yet to be finalized, and the buyer assumed certain
liabilities. From a portion of the proceeds of this sale, the company repaid
$5.0 million in short term debt. During the nine months ended October 31,1999,
the company repurchased 388,445 shares of its common stock. The average purchase
price was $15.27 per share for a total cost of $5.9 million. Subsequent to the
third quarter the company repurchased an additional 270,000 shares for a total
of 658,445 shares for the year. The company's cash was $4.6and cash equivalents balance of $1.9 million at OctoberApril 30,
2000 was $3.8 million less than January 31, 1999, compared with $2.92000, and $189,000 lower than April
30, 1999. There were no borrowings against the company's line of credit as of
April 30, 2000, which was the same as January 31, 2000 and April 30, 1999. The
cash balance as of January 31, 2000 was sufficient to fund the seasonal
increases in inventory levels and prepay $1.0 million one year earlier.of long-term debt due in
June 2000. Inventory levels decreased $2.3declined $4.4 million from the October 31, 1998, levelApril 30, 1999 to April
30, 2000, due primarily to the sale of Galsstite's assets.the assets of our Glasstite subsidiary in
fiscal 2000. From April 30, 1999 through April 30, 2000, the company repurchased
899,504 shares of its common stock for a total of $13.4 million, including $2.9
million in the quarter ended April 30, 2000. The Company retains its minimum $5.0company had $3.0 million line of
credit.in
long-term debt at April 30, 2000, including the current portion, down from $4.6
million at April 30, 1999. The company's capital resources continue to be
sufficient to fund all its activities.
RESULTS OF OPERATIONS
Sales were $45.0 million for the quarter ended October 31, 1999, an increaseApril 30, 2000, were $31.5 million, down $3.0
million from the previous year's results, due primarily to the sale of $184,000 overour
Glasstite subsidiary in fiscal 2000. Glasstite sales for the thirdfirst quarter oflast
year totaled $5.7 million. After adjusting last fiscal year's first quarter
results for the prior year. For the nine months ended
October 31, 1999,Glasstite sale, sales increased 3 percent to $116.4$2.7 million comparedthis quarter. Most
of this sales increase was generated in our Electronics and Plastics segments.
Net income for the first quarter was $1.7 million, $238,000 superior to last
year's $113.2 million. Net income climbed 20 percentfirst quarter. Last year's results included Glasstite's contribution of
$381,000 to $5.5 million or a record
$1.22operating income. The number of shares outstanding for the first
quarter ended April 30, 2000, compared to the first quarter April 30, 1999, was
down 899,504 shares due to the company's on-going repurchase of stock. Earnings
per diluted share comparedclimbed to $4.6 million or 96 cents per diluted sharea first quarter record-tying $0.44 from $0.31 in
the first nine monthsquarter of the previous year.
Results included a $966,000
pretax gain on the Glasstite sale, and a $800,000 pretax inventory charge
related to third-quarter actions by the new managers of Raven operating units
who are repositioning certain elements of the company's business. The Plastic
segment and Electronics segment generated sales increases over last year for
both the third quarter and the year-to-date figures. Operating income for the
third quater increased 12 percent to $3.6 million from $3.2 million a year
earlier. Third-quarter earnings per share on a diluted basis rose 18 percent to
52 cents a diluted share, compared to 44 cents a share in the third quarter of last year, with 372,684 fewer average common equivalent shares outstanding. For
the nine months, operating income rose 20 percent to $8.6 from $7.2 million for
the same period last year.
Electronics segment third-quarter sales were $12.2 million, which was an
increase of 6 percent or $678,000 over the same period last year. Operating
income, however, declined 22 percent to $679,000 from $872,000 the prior year.
The increase in sales was due primarily to stronger deliveries from the contract
manufacturing operations. Their sales increased to $5.8$14.1 million in the thirdfirst quarter from $5.0 million last year. The decline in operating income was due to
the impact of $300,000 in inventory valuation adjustments described above and
continuing inefficiencies in new business in the contract manufacturing
operations.were 9 percent
higher than one year earlier. Sales of flow control devices increased by more
than $1.0 million in the thirdfirst quarter, at $3.4 milliondue primarily to increased product
recognition in the marketplace and aggressive marketing. Management remains
cautious about the sustainability of this demand in what continues to be a weak
agricultural marketplace. Sales of feedmill automation systems were even with last year's third quarterdown 13
percent, due to the continuing weakness in the
agricultural markets. However, through cost cutting and production efficiencies
they were able to improve their gross margin rates. Third-quarter sales of
feedmill automation systems fell $192,000 to $3.0 million due to a decrease in
demand for new systems. Sales for the nine months totaled $37.0 million compared
to $34.7 million for the same period in fiscal 1999. Operating income for the
nine months was $2.3 million, down 27 percent from the prior year's $3.1
million.
Plastics segment sales of $20.0 million for the third quarter were 4 percent
more than the same period last year. Sales of $58.0 million forpoor ag economy. Contract electronics showed
excellent gains during the first nine
months were 10quarter, logging a 9 percent greater thanincrease in sales
over last year's total, due primarily to heavy deliveries of a long-term
contract relating to the $52.5 million generated in the first
nine months of fiscal 1999. Thirdcomputer industry. First quarter operating income for
the Electronics segment was $2.6$1.5 million, up sharply68 percent from last year's
$866,000. This increase is due to improved sales of higher-margin products along
with higher sales volumes, which allow for improved factory utilization and
labor efficiencies.
Page 8
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
duePlastics segment sales of $14.0 million in substantial partthe quarter ended April 30, 2000
compared to the $966,000 gain on the sale$18.6 million last year, and $12.9 million after adjusting for
Glasstite's first quarter 1999 sales, or an increase in Plastic segment sales of
Glasstite. Adjusted
for the gain, operating income$1.1 million. All of this increase was up slightly, but partially offset by $250,000generated in inventory-valuation adjustments. The research balloons,our engineered films and
pickup truck topper product
lines showedline, due to increased sales in both the second
quarter and the year-to-date figures. Year-to-date operating income was $5.9
million compared to $3.2 million the first nine monthsmarket share. Sales of last fiscal year. The
increase in operating margins in the Plastics segment wasplastic tanks were down slightly,
due primarily to continuing weak agricultural demand. Operating income for the
salesegment in fiscal 2001 was $1.3 million, down 16 percent from last year's $1.6
million, which included Glasstite's contribution to $381,000 of Glasstite. However, there were also positive effects from slightly
better prices on purchased material, small increasesoperating income
in selling prices, and
better equipment and labor utilization.the first quarter of last year.
Sewn Products segment sales are typically at a seasonal low in the first quarter
of $12.8the fiscal year. First quarter sales of $3.5 million were up $490,000 over
last year's $3.0 million. The sales increase was due to off-season contracts
obtained to provide work for our factories. The operating loss for the segment
was unchanged from last year at $183,000. This loss is the result of the less
profitable off-season business. Management does not expect first quarter results
to be representative of the full year. Although full-year sales are expected to
decline from last year's $28 million for this segment, management expects the
third quarter were short of
the $14.1 million figure logged for the same period last year. Year-to-date
sales of $21.4 million were 17 percent below the nine-month results of fiscal
1999. Management is projecting lower sales totals in the segment's contract
sewing product line due to offshore competition. Third quartersegment will generate an operating income
of $311,000 compares to $761,000 generated in the third quarter of fiscal 1999.
This result reflects $250,000 of inventory valuation adjustments described above
in the contract sewing product line. New management in contract sewing line is
repositioning the focus of the product offering. Year-to-date operating income
was $515,000, $367,000 less than last year's nine-month total.profit during that timeframe.
Consolidated gross profits of $6.5$6.3 million in the thirdfirst quarter were $556,000
less4 percent
higher than the thirdprior year's first quarter, last year. The current year figure reflects $800,000
in inventory charges. The nine months generated an increase of $591,000 in gross
profits, rising from $18.5 million to $19.1 million over the same period the
prior year. These increases were due primarily to the strong
performance of the PlasticsElectronics segment. Selling expenses were down by 810 percent forlower
than the quarterprior year because of the sale of our Glasstite subsidiary operation
and 5
percent forof the nine months due to decreasedcompany's proprietary skiwear product line, which had higher selling
staff.expenses than other businesses of the company. Administrative expenses were up 12 percent for the quarter and 8 percent on a year-to-date
basis reflecting increases in bad debt expenses, consulting and compensation.
Third quarter pretax income of $3.5 million was 106
percent higher than last
year's $3.2 million. The pretaxthe previous year reflecting increased bad debt and benefits
expenses. Pretax income forof $2.6 million was 16 percent greater than the nine months was $8.6 million
compared to $7.1 million last year. These results generated a 27 percent
increase year-to-date in per share diluted earnings, rising from 96 cents in
fiscal 1999 to $1.22 in fiscal 2000.
YEAR 2000 STATEMENT
Allfirst
quarter of the company's business software has been changed to be 2000-compliant and
is currently in daily production. The platform on which this software runs is
2000-compliant. Production equipment is being checked, and any problems
identified are being addressed. Building equipment has been checked, and only
one problem was found, which was corrected in March 1999. Since the company does
not run its primary business software on personal computers, management does not
expect any material problems from non-compliant personal computers. Vendors and
service providers have been surveyed to ensure that they are 2000-compliant. Any
problems identified are being addressed.
Page 9
PART I - FINANCIAL INFORMATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
SAFE HARBOR STATEMENTprior fiscal year.
FORWARD-LOOKING STATEMENTS
THIS REPORT CONTAINS DISCUSSIONS OF ITEMS WHICH MAY CONSTITUTE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF FEDERAL SECURITIES LAWS. ALTHOUGH RAVEN
INDUSTRIES BELIEVES THAT EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON REASONABLE ASSUMPTIONS, IT CAN GIVE NO ASSURANCES THAT
ITS EXPECTATIONS WILL BE ACHIEVED. FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER FROM EXPECTATIONS INCLUDE GENERAL ECONOMIC CONDITIONS, WEATHER CONDITIONS
WHICH COULD AFFECT CERTAIN OF THE COMPANY'S PRIMARY MARKETS SUCH AS THE
AGRICULTURAL MARKET OR ITS MARKET FOR OUTERWEAR, OR CHANGES IN COMPETITION WHICH
COULD IMPACT ANY OF THE COMPANY'S PRODUCT LINES.
Page 109
PART II-OTHERII - OTHER INFORMATION
Item 1. Legal Proceedings:
NoneThe company is involved as a defendant in lawsuits, claims or disputes
arising in the normal course of business. The settlement of such claims
cannot be determined at this time. Management believes that any
liability resulting from these claims will be substantially mitigated by
insurance coverage. Accordingly, management does not believe the
ultimate outcome of these matters will be significant to its results of
operations, financial position or cash flows.
Item 2. Changes in Securities: None
Item 3. Defaults upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders: NoneNone.
Item 5. Other Information: None
Item 6. (a) Exhibits Filed: Exh. 27-Financial Data schedule (for SEC only).
(b) Reports on Form 8-K: An 8-K was filed November 9, 1999, concerning
the October 29, 1999 sale of the assets of the Company's Glasstite
Subsidiary.None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RAVEN INDUSTRIES, INC.
/s/ Thomas Iacarella
-------------------------------------------------------------------------------
Thomas Iacarella
Vice President, Finance, Secretary
and Treasurer (Principal Financial
and Accounting Officer)
DATE: DECEMBER 15, 1999JUNE 5, 2000
Page 1110