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 Yeso No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).þ Yeso No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).o Yesþ No

As of August 31,November 30, 2009 there were 18,020,91518,026,055 shares of common stock, $1 par value, of Raven Industries, Inc. outstanding. There were no other classes of stock outstanding.

 

The accompanying unaudited consolidated financial information has been prepared by Raven Industries, Inc. (the “company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, it does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of this financial information have been included. Financial results for the interim three and six-monthnine-month periods ended JulyOctober 31, 2009 are not necessarily indicative of the results that may be expected for the year ending January 31, 2010. The January 31, 2009 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. This financial information should be read in conjunction with the consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended January 31, 2009.

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

The company’s gross margins may not be comparable to industry peers due to variability in the classification of these expenses across the industries in which the company operates.

The company’s research and development expense is comprised principally of labor and material costs related to product development efforts in the Applied Technology segment. During the three and six monthnine-month periods ended JulyOctober 31, 2009, $1.4$1.5 million and $2.9$4.4 million, respectively, were expended on research and development. During the three and six monthnine-month periods ended JulyOctober 31, 2008, $1.5$1.7 million and $2.8$4.5 million, respectively, were expended on research and development.

Basic net income per share is computed by dividing net income by the weighted-average common shares and stock units outstanding. Diluted net income per share is computed by dividing net income by the weighted-average common and common equivalent shares outstanding (which includes the shares issuable upon exercise of employee stock options net of shares assumed purchased with the option proceeds) and stock units outstanding. Certain outstanding options were excluded from the diluted net income per-share calculations because their effect would have been anti-dilutive, as their exercise prices were greater than the average market price of the company’s common stock during those periods. For the three and six monthnine-month periods ended JulyOctober 31, 2009, 318,600317,900 and 318,663318,408 shares were excluded, respectively. For the three and six monthsnine-month periods ended JulyOctober 31, 2008, 74,200 and 144,88374,467 shares were excluded, respectively. Details of the earnings per share computation are presented below:

The company’s reportable segments are defined by their common technologies, production processes and inventories. These segments are consistent with the company’s management reporting structure and reflect the organization of the company into the three Raven divisions and the Aerostar subsidiary. Raven Canada and Raven GmbH are included in the Applied Technology Division. The company measures the performance of its segments based on their operating income exclusive of administrative and general expenses. Other income, interest expense and income taxes are not allocated to individual operating segments. Intersegment transactions are eliminated in a separate caption entitled “intersegment eliminations” to arrive at consolidated sales and operating income. SecondThird quarter and first halfnine-month intersegment sales were primarily from Electronic Systems to Applied Technology. The results for these segments follow:

shareholders’ equity but are excluded from net income. The components of total comprehensive income and accumulated other comprehensive income (loss) follow:

an entity’s financial position, financial performance and cash flows. The adoption of SFAS No. 161this guidance had no impact on the company’s consolidated results of operations, financial condition or cash flows.

At the beginning of fiscal 2010, the company adopted FSP No. FAS 142-3,Determination of the Useful Life of Intangible Assets, whichFASB guidance that amends the list of factors an entitythat should considerbe considered in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142,Goodwill and Other Intangible Assets. The new guidance appliesapply to (1) intangible assets that are acquired individually or with a group of other assets, and (2) intangible assets acquired in both business combinations and asset acquisitions. Under FSP No. FAS 142-3, entitiesEntities estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension. As this guidance applies only to assets acquired in the future, the company is not able to predict the impact, if any, on the company’s consolidated results of operations, financial condition or cash flows.

This commentary should be read in conjunction with the company’s consolidated financial statements for the three and six monthsnine-months ended JulyOctober 31, 2009 and JulyOctober 31, 2008, as well as the company’s consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in the company’s Form 10-K for the year ended January 31, 2009.

Raven Industries, Inc. is an industrial manufacturer providing a variety of products to customers within the industrial, agricultural, construction and military/aerospace markets, primarily in North America. The company operates in four business segments: Applied Technology (formerly Flow Controls), Engineered Films, Electronic Systems and Aerostar.

The Applied Technology segment is predominately focused on the agricultural market and quarterly financial results have typically been impacted by the inherent seasonality of this market. Historically, Applied Technology’s first quarter results are the strongest and the second quarter the weakest.

Consolidated financial highlights for the secondthird quarter and first sixnine months of fiscal 2010 include the following:

resulted in reduced demand for construction films and depressed selling prices. Additionally, demand for pit liners declined, reflecting less oil and gas drilling activity caused by falling oil prices. Sequentially, gross margins fell from 25.8% in the first quarter of fiscal 2010improved to 18.2%19.9% in the current quarter reflecting approximatelyfrom 18.2% in the second quarter as a result of increased sales volume. First quarter fiscal 2010 gross margins of 25.8% included $1.3 million of first quarter profit from one-time opportune purchases of prime grade plastic resin.

Fiscal 2010 third quarter net sales of $17.9$15.7 million in the second quarter of fiscal 2010 grew $3.2decreased $2.2 million (22%(13%) and operating income of $3.0$1.6 million rose $1.7 million (139%fell $237,000 (13%) as compared to the second quarter of fiscal 2009. Electronic Systemslast year’s third quarter. Quarterly results were negatively impacted by raw material supply issues, which resulted in additional costs and time delays. Year-over-year net sales of $34.1$49.7 million in the first half of fiscal 2010 improved $6.0grew $3.8 million (22%(8%) and operating income of $5.5$7.0 million in the first half of fiscal 2010 increased $3.6$3.3 million (190%(91%) as compared to the first half of fiscal 2009. Electronic Systems second quarter and first half. Year-to-date results were positively impacted by strongersolid shipments of printed circuit boards for the aviation industry and secure communication devices.devices, along with production efficiencies.

Fiscal 2010 secondthird quarter net sales of $5.8$5.9 million grew $291,000 (5%$479,000 (9%) and operating income of $1.1$1.3 million expanded $418,000 (58%$346,000 (38%) as compared to the second quarter of fiscal 2009. Aerostar’s fiscal 2010 first halflast year’s third quarter. Year-over-year net sales of $12.4$18.3 million rose $837,000 (7%were up $1.3 million (8%) and operating income of $2.3$3.6 million improved $770,000 (51%$1.1 million (46%) as compared to the first half of fiscal 2009. Aerostar’s second quarter and first half. The positive results were positively impacted byreflect increased shipments under theof MC-6 Army parachute contract which wasparachutes partially offset by a decline in protective wear shipments.

Applied Technology provides electronic and Global Positioning System (GPS) products designed to reduce operating costs and improve yields for the agriculture market.

The following factors contributed to the quarter-over-quarter and year-over-year change:

Electronic Systems is a total-solutions provider of electronics manufacturing services, primarily to North American original equipment manufacturers.

addition, deliveries of pit liners to the energy exploration market are expectedremain depressed relative to decline from prior yearlast year’s record levels. Drilling activity has slowed due to lower oil prices and reductions in forecasted demand. Recent increases in oil prices are encouraging but it is unlikely that drilling activity will return to prior year levels. Because gross profit rateslevels as there is widespread uncertainty as to the sustainability of current prices. Management expects a profitable fourth quarter in contrast to the operating loss reported for the final three months of fiscal 2009. Margins have improved management does not expectas a result of the previous year’s fourth quarter loss to be repeated.segment’s reduced cost structure.

Electronic Systems thirdfourth quarter sales and profits are expectedanticipated to decline from last year’s thirdfourth quarter however, profits are forecasted to increase year-over-year as cost cutting and plant consolidation measures are expected to continue to result in efficiency gains and improved margins. Sequentially, margins are expected to be lower due to product mix, although will remain strong as compared year-over-year. With avionics sales accounting for more than 50 percent of this segment’s sales, an anticipated inventory reduction by the segment’s largest customer could furtheris expected to reduce its inventory levels by year-end. Sequentially, management is cautious due to the impact of the recession on avionics sales and an expected decrease in the fourth quarter.secure communication product deliveries.

Although Aerostar’s long-term potentialLong-term results will be driven by successAerostar’s ability to succeed in the high-altitude research balloon and tethered aerostats markets, third quarter sales and profits are expected to be up as compared with one year earlier due to higheraerostat markets. The MC-6 Army parachute deliveries. Salescontract will wind down in the fourth quarter. Also, the previous year’s fourth quarter included $3 million of parachute sales that were delayed from the third quarter. As a result,Consequently, fourth quarter year-over-year comparisons are expected to be unfavorable.unfavorable, however, this may be partially offset by increased sales of tethered aerostats.

The company’s liquidity and capital resources are strong despite the global economic recession. Management focuses on the current cash balance and operating cash flows in considering liquidity as operating cash flows have historically been the company’s primary source of liquidity. Management expects that current cash combined with the generation of positive operating cash flows will be sufficient to fund the company’s operating, investing and financing activities.

The company’s cash needs are seasonal, with working capital demands strongest in the first quarter. Consequently, the discussion of trends in operating cash flows focuses on the primary drivers of year-over-year variability in working capital.

Cash, cash equivalents and short-term investments totaled $43.0$46.3 million at JulyOctober 31, 2009, a $26.8$30.0 million increase compared to cash, cash equivalents and short-term investments at January 31, 2009 of $16.3 million. The comparable balances one year earlier totaled $32.2$31.2 million. In November 2008, the company paid a special cash dividend of $22.5 million.

Cash provided by operating activities was $34.3$40.5 million in the first halfthree quarters of fiscal 2010 compared to $22.9$26.6 million in the first halfthree quarters of fiscal 2009. The company’s operating cash flows result primarily from cash received from customers offset by cash payments for inventories, services and employee compensation. The increase in first half operating cash flows is the result of variability in working capital. For the six-monthnine-month period, inventoryreduction in inventories and accounts receivable have combined to generate $18.0$10.0 million in cash as compared with cash consumed of $5.1$12.5 million during last year’s first six months.nine-months. Inventory balances have declined significantly due to improved management, lower sales and a drop in plastic resin costs. Additionally, accounts receivable have declined which reflects the decrease in business activity. This was partially offset by year-over-year reductions in accounts payable.

There have been no material changes since the fiscal year ended January 31, 2009.

At the beginning of fiscal 2010, the company adopted SFAS No. 161,DisclosuresFASB guidance that amends required disclosures about Derivative Instrumentsderivative instruments and Hedging Activities—an amendment of FASB Statement No. 133. SFAS No. 161hedging activities. This guidance requires enhanced disclosures about (a) how and why derivative instruments are used, (b) how derivative instruments and related hedged items are accounted for and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The adoption of SFAS No. 161this guidance had no impact on the company’s consolidated results of operations, financial condition or cash flows.

At the beginning of fiscal 2010, the company adopted FSP No. FAS 142-3,Determination of the Useful Life of Intangible Assets, whichFASB guidance that amends the list of factors an entitythat should considerbe considered in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under SFAS No. 142,Goodwill and Other Intangible Assets. The new guidance appliesapply to (1) intangible assets that are acquired individually or with a group of other assets, and (2) intangible assets acquired in both business combinations and asset acquisitions. Under FSP No. FAS 142-3, entitiesEntities estimating the useful life of a recognized intangible asset must consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, must consider assumptions that market participants would use about renewal or extension. As this guidance applies only to assets acquired in the future, the company is not able to predict the impact, if any, on the company’s consolidated results of operations, financial condition or cash flows.

As of July 31, 2009, the company adopted SFAS No. 165,Subsequent Events,FASB guidance which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statementguidance sets forth: (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The adoption of SFAS No. 165this guidance did not have a material impact on the company’s consolidated results of operations, financial condition or cash flows. In accordance with SFAS No. 165,this guidance, the company has evaluated subsequent events through the date and time the financial statementsfinancials were issued on September 2,December 4, 2009.

In June 2009, the FASB issued SFAS No. 168,amended its guidance on accounting for variable interest entities. This guidance alters the approach to determining the primary beneficiary of a variable interest entity and requires companies to more frequently assess whether they must consolidate variable interest entities. The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162. SFAS 168 establishes a two-level GAAP hierarchy for nongovernmental entities: authoritative guidance and non-authoritative guidance. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, and EITF Abstracts; instead, the Board will issue new guidance as Accounting Standards Updates, which will include revisions to the codification, as well as background information and the Board’s basis for conclusions for new guidance. SFAS No. 168 is effective for interim andthe first annual reporting period beginning after November 15, 2009 and for interim periods ending after September 15, 2009.within that first annual reporting period. The company will adopt this guidance on February 1, 2010 and is currently assessing the potential impacts, if any, on its financial statements and disclosures.

In October 2009, the FASB issued guidance on the accounting for multiple-deliverable revenue arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable; eliminates the residual method of allocation and requires arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method; and requires a vendor to determine its best estimate of selling price in a manner consistent with that used to determine the selling price of the deliverable on a stand alone basis. This guidance also expands the required disclosures related to a vendor’s multiple-deliverable revenue arrangements. The guidance is effective beginning February 1, 2011 with early adoption permitted. The company has adopted the new guidance prospectively from the beginning of SFAS No. 168 will not have anthe fiscal year and determined that there is no material impact on the company’sits consolidated results of operations, financial condition, cash flows, or cash flows.disclosures.

The exposure to market risks pertains mainly to changes in interest rates on cash and cash equivalents and short-term investments. The company has no debt. The company does not expect operating results or cash flows to be significantly affected by changes in interest rates. Additionally, the company does not enter into derivatives or other financial instruments for trading or speculative purposes.