UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)



þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended ~~October 31, 2011~~April 30, 2012



o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File: 001-07982

RAVEN INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)



South Dakota (State of incorporation)		46-0246171 (IRS Employer Identification No.)

205 East 6th Street, P.O. Box 5107, Sioux Falls, SD 57117-5107

(Address of principal executive offices)

(605) 336-2750

(Registrant’s telephone number including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o 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):



Large ~~accelerated~~Accelerated filer oþ	Accelerated filer þo	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

As of ~~November 30, 2011~~May 29, 2012 there were ~~18,103,963~~18,136,822 shares of common stock, $1 par value, of Raven Industries, Inc. outstanding. There were no other classes of stock outstanding.

RAVEN INDUSTRIES, INC.

INDEX



	PAGE

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements:
Consolidated Balance Sheets (unaudited)	3
Consolidated Statements of Income and Comprehensive Income (unaudited)	4
Consolidated Statements of Cash Flows (unaudited)	5
Notes to Consolidated Financial Statements (unaudited)	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	911
Item 3. Quantitative and Qualitative Disclosures about Market Risks	1817
Item 4. Internal Controls and Procedures	1817

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	1918
Item 1A. Risk Factors	1918
Item 2. Changes in Securities	1918
Item 3. Defaults upon Senior Securities	1918
Item 4. ~~Reserved~~Mine Safety Disclosures	1918
Item 5. Other Information	1918
Item 6. Exhibits Filed	1918
Signatures	2019
~~EX-31.1~~
~~EX-31.2~~
~~EX-32.1~~
~~EX-32.2~~
~~101.INS~~
~~101.SCH~~
~~101.CAL~~
~~101.DEF~~
~~101.LAB~~
~~101.PRE~~

~~Table of Contents~~

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RAVEN INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS
(unaudited)

(in thousands, except per-share data) October 31,
2011 January 31,
2011 October 31,
2010
ASSETS
Current Assets
Cash and cash equivalents $ 44,223
$ 37,563
$ 28,470
Short-term investments —
1,000
1,500
Accounts receivable, net of allowances of $200, $300 and $299, respectively 50,661
39,967
48,733
Inventories:
Materials 33,905
30,261
26,189
In process 8,238
5,424
6,209
Finished goods 7,713
7,994
4,725
Total inventories 49,856
43,679
37,123
Deferred income taxes 2,714
2,733
2,699
Prepaid expenses and other current assets 1,867
3,239
2,996
Total current assets 149,321
128,181
121,521

Property, plant and equipment 121,988
102,080
96,063
Accumulated depreciation (65,082 ) (60,558 ) (58,851 )
Property, plant and equipment, net 56,906
41,522
37,212
Goodwill 10,777
10,777
10,777
Amortizable intangible assets, net 1,738
1,585
1,741
Other assets, net 4,395
5,695
6,166

TOTAL ASSETS $ 223,137
$ 187,760
$ 177,417

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable $ 17,568
$ 16,715
$ 11,343
Accrued liabilities 13,862
14,643
15,113
Taxes — accrued and withheld 2,912
1,453
2,034
Customer advances 2,356
1,524
1,105
Total current liabilities 36,698
34,335
29,595

Other liabilities 13,582
12,211
11,683
Total liabilities 50,280
46,546
41,278

Commitments and contingencies

Shareholders’ equity:
Common stock, $1 par value, authorized shares 100,000; issued 32,548, 32,511 and 32,492, respectively 32,548
32,511
32,492
Paid in capital 8,770
7,060
6,432
Retained earnings 185,911
156,125
151,613
Accumulated other comprehensive loss (1,043 ) (1,120 ) (1,036 )
Less treasury stock, at cost, 14,449 shares (53,362 ) (53,362 ) (53,362 )
Total Raven Industries, Inc. shareholders' equity 172,824
141,214
136,139
Noncontrolling interest 33
—
—
Total shareholders’ equity 172,857
141,214
136,139

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 223,137
$ 187,760
$ 177,417

~~The accompanying notes are an integral part of the unaudited consolidated financial information.~~

~~Table of Contents~~

~~RAVEN INDUSTRIES, INC.~~

~~CONSOLIDATED STATEMENTS OF INCOME~~

~~(unaudited)~~

Three Months Ended Nine Months Ended
(in thousands, except per-share data) October 31,
2011 October 31,
2010 October 31,
2011 October 31,
2010
Net sales $ 93,300
$ 85,823
$ 285,185
$ 244,027

Cost of sales 66,046
60,936
196,865
171,580

Gross profit 27,254
24,887
88,320
72,447

Research and development expenses 2,499
1,582
7,116
5,664

Selling, general and administrative expenses 7,880
5,890
22,122
17,240

Gain on disposition of assets —
(451 ) —
(451 )
Operating income 16,875
17,866
59,082
49,994

Other income (expense), net (4 ) 17
(93 ) (25 )
Income before income taxes 16,871
17,883
58,989
49,969

Income taxes 5,473
6,050
19,414
16,838

Net income 11,398
11,833
39,575
33,131

Net income attributable to the noncontrolling interest 8
—
8
—

Net income attributable to Raven Industries, Inc. $ 11,390
$ 11,833
$ 39,567
$ 33,131

Net income per common share:
Basic $ 0.63
$ 0.65
$ 2.18
$ 1.83

Diluted $ 0.63
$ 0.65
$ 2.17
$ 1.83

Cash dividends paid per common share $ 0.18
$ 1.41
(a) $ 0.54
$ 1.73
(a)

~~(a)~~ ~~Includes a special dividend of $1.25 per share paid on September 30, 2010.~~



(in thousands, except per-share data)	April 30, 2012			January 31, 2012			April 30, 2011
ASSETS
Current assets
Cash and cash equivalents	$	43,536		$	25,842		$	42,125
Short-term investments	—			—			500
Accounts receivable, net of allowances of $170, $170, and $200, respectively	58,641			60,759			50,542
Inventories	54,664			54,756			45,538
Deferred income taxes	3,182			3,299			2,878
Other current assets	4,886			2,903			3,113
Total current assets	164,909			147,559			144,696

Property, plant and equipment, net	64,888			61,894			42,409
Goodwill	22,274			22,274			10,777
Amortizable intangible assets, net	9,220			9,412			1,700
Other assets, net	4,434			4,564			4,653
TOTAL ASSETS	$	265,725		$	245,703		$	204,235

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	17,134		$	16,162		$	17,447
Accrued liabilities	20,665			20,397			11,782
Taxes - accrued and withheld	11,300			2,596			6,713
Customer advances	1,200			1,491			1,320
Total current liabilities	50,299			40,646			37,262

Other liabilities	18,931			24,467			12,637

Commitments and contingencies

Shareholders' Equity
Common stock, $1 par value, authorized shares 100,000; issued 32,576; 32,566; and 32,528, respectively	32,576			32,566			32,528
Paid in capital	10,240			9,607			7,540
Retained earnings	208,871			193,650			168,582
Accumulated other comprehensive loss	(1,901		)	(1,962		)	(952		)
Less treasury stock at cost, 14,449 shares	(53,362		)	(53,362		)	(53,362		)
Total Raven Industries, Inc. shareholders' equity	196,424			180,499			154,336
Noncontrolling interest	71			91			—
Total shareholders' equity	196,495			180,590			154,336
TOTAL LIABILITY AND SHAREHOLDERS' EQUITY	$	265,725		$	245,703		$	204,235

The accompanying notes are an integral part of the unaudited consolidated financial ~~information.~~

statements.

4#3

~~Table~~

RAVEN INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOMEAND COMPREHENSIVE INCOME

(unaudited)



	Three Months Ended
(in thousands, except per-share data)	April 30, 2012			April 30, 2011
Net sales	$	117,915		$	101,541
Cost of sales	76,780			68,605
Gross profit	41,135			32,936

Research and development expenses	3,400			2,243
Selling, general and administrative expenses	9,303			7,160
Operating income	28,432			23,533

Other income (expense), net	(52		)	(13		)
Income before income taxes	28,380			23,520

Income taxes	9,357			7,804
Net income	19,023			15,716

Net (loss) attributable to the noncontrolling interest	(20		)	—

Net income attributable to Raven Industries, Inc.	$	19,043		$	15,716

Net income per common share:
─ Basic	$	1.05		$	0.87
─ Diluted	$	1.04		$	0.86

Cash dividends paid per common share	$	0.21		$	0.18

Comprehensive income:
Net income	$	19,023		$	15,716

Other comprehensive income, net of tax:
Foreign currency translation	23			139
Postretirement benefits, net of income tax of $20 and $15, respectively	38			29
Other comprehensive income, net of tax	61			168

Comprehensive income	19,084			15,884

Comprehensive (loss) attributable to noncontrolling interest	(20		)	—

Comprehensive income attributable to Raven Industries, Inc.	$	19,104		$	15,884

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

RAVEN INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended						Three Months Ended
(in thousands)	October 31, 2011			October 31, 2010			April 30, 2012			April 30, 2011
OPERATING ACTIVITIES:
Net income	$	39,575		$	33,131		$	19,023		$	15,716
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,481			5,578			2,892			1,985
Gain on disposition of assets	—			(451		)
Change in fair value of acquisition-related contingent consideration	(135		)	238			(253		)	31
Earnings of equity investee							24			1
Deferred income taxes	1,462			(100		)	(477		)	845
Share-based compensation expense	1,375			788			525			392
Change in operating assets and liabilities:
Accounts receivable	(10,625		)	(14,314		)	2,105			(10,468		)
Inventories	(6,176		)	(2,638		)	97			(1,833		)
Prepaid expenses and other assets	(670		)	(346		)
Prepaid expense and other assets							(1,793		)	(1,117		)
Operating liabilities	6,562			4,533			6,077			5,463
Other operating activities, net	(120		)	(131		)	(8		)	(7		)
Net cash provided by operating activities	37,729			26,288			28,212			11,008

INVESTING ACTIVITIES:
Capital expenditures	(22,070		)	(9,417		)	(4,900		)	(3,585		)
Purchase of short-term investments	—			(1,700		)
Sale of short-term investments	1,000			3,200
Proceeds from disposition of assets	—			888
Payments related to business acquisitions	(88		)	(390		)
Payments related to business acquisitions, net of cash acquired							(1,867		)	(8		)
Sales of short-term investments							—			500
Other investing activities, net	(507		)	83			(58		)	(264		)
Net cash used in investing activities	(21,665		)	(7,336		)	(6,825		)	(3,357		)

FINANCING ACTIVITIES:
Dividends paid	(9,766		)	(31,206		)	(3,806		)	(3,254		)
Other financing activities, net	356			11			103			100
Net cash used in financing activities	(9,410		)	(31,195		)	(3,703		)	(3,154		)

Effect of exchange rate changes on cash	6			29			10			65
Net increase in cash and cash equivalents	6,660			(12,214		)
Cash and cash equivalents:
Beginning of period	37,563			40,684
End of period	$	44,223		$	28,470

Net increase (decrease) in cash and cash equivalents							17,694			4,562
Cash and cash equivalents at beginning of year							25,842			37,563
Cash and cash equivalents at end of year							$	43,536		$	42,125

The accompanying notes are an integral part of the unaudited consolidated financial ~~information.~~

statements.

~~Table of Contents~~

RAVEN INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except per-share amounts)

(1) ~~Basis of Presentation~~BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

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~~ ~~nine~~three-month ~~periods~~period ended ~~October 31, 2011~~April 30, 2012 are not necessarily indicative of the results that may be expected for the year ending January 31, ~~2012~~2013. The January 31, ~~2011~~2012 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, ~~2011~~2012.

~~(2) Summary of Significant Accounting Policies~~

~~There have been no material changes~~Non-controlling interests represent capital contributions, income and loss attributable to the ~~company's significant accounting policies as compared to the significant accounting policies described in the company's Annual Report on Form 10-K for the fiscal year ended~~ ~~January 31, 2011~~.

~~(3) Noncontrolling Interest~~

owners of less than wholly-owned and consolidated entities. The company ~~entered into~~owns a business venture agreement to pursue potential product and support service contracts for agencies and instrumentalities for the United States Government. The business venture, Aerostar Integrated Systems (AIS), is 75 percent owned by the company and will be included75% interest in an entity consolidated under the Aerostar business segment. Given the company's majority ownership interest, the accounts of the business venture 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. ~~Total capital contribution and~~The non-controlling interests share of the net ~~income~~loss was $20 for the three ~~and nine month period~~months ended ~~October 31, 2011 were $100 and $32, respectively.~~April 30, 2012. The non-controlling interest made no capital contributions during the three months ended April 30, 2012.

~~(4) Net Income Per Share~~(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the company's significant accounting policies as compared to the significant accounting policies described in the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2012. Additionally, there were no new accounting standards issued or effective during the three months ended April 30, 2012 that had or are expected to have a material impact on the company's consolidated results of operations, financial condition, or cash flows.

(3) NET INCOME PER SHARE

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), stock units and restricted stock units outstanding. Performance share awards are included in the diluted calculation based upon what would be issued if the end of the most recent reporting period was the end of the term of the award.

Certain outstanding options and units were excluded from the diluted net income per-share calculations because their effect would have been ~~anti-dilutive.~~anti-dilutive under the treasury stock method. For the ~~three and~~ ~~nine~~three-month periods ended ~~October 31,~~April 30, 2012 and April 30, 2011, ~~zero~~169 and 136 shares and units were excluded, respectively. ~~For the three and~~ ~~nine-month periods ended~~ ~~October 31, 2010~~, 25 ~~and~~ ~~164~~ ~~shares were excluded, respectively.~~

Details of the ~~earnings per share~~ computation are presented below:

~~Table of Contents~~(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)


	Three Months Ended				Nine Months Ended				Three Months Ended
	October 31, 2011		October 31, 2010		October 31, 2011		October 31, 2010		April 30, 2012		April 30, 2011
Numerator:
Net income attributable to Raven Industries, Inc.	$	11,390	$	11,833	$	39,567	$	33,131	$	19,043	$	15,716

Denominator:
Weighted average common shares outstanding	18,097		18,040		18,085		18,036		18,122		18,075
Weighted average stock units outstanding	24		27		27		25		25		27
Denominator for basic calculation	18,121		18,067		18,112		18,061		18,147		18,102

Weighted average common shares outstanding	18,097		18,040		18,085		18,036		18,122		18,075
Weighted average stock units outstanding	24		27		27		25		25		27
Dilutive impact of stock options	98		48		103		31
Dilutive impact of stock options and restricted units									114		110
Denominator for diluted calculation	18,219		18,115		18,215		18,092		18,261		18,212

Net income per share — basic	$	0.63	$	0.65	$	2.18	$	1.83
Net income per share — diluted	$	0.63	$	0.65	$	2.17	$	1.83
Net income per share - basic									$	1.05	$	0.87
Net income per share - diluted									$	1.04	$	0.86

(4) SELECTED BALANCE SHEET INFORMATION

Following are the components of selected balance sheet items:




	April 30, 2012		January 31, 2012		April 30, 2011
Inventories:
Finished goods	$	7,688	$	7,094	$	7,916
In process	6,847		6,105		5,986
Materials	40,129		41,557		31,636
	$	54,664	$	54,756	$	45,538
Accrued liabilities:
Salaries and benefits	$	2,635	$	4,297	$	1,972
Vacation	4,584		4,387		3,504
401(k) contributions	555		966		228
Insurance obligations	2,887		2,789		3,134
Profit sharing	413		1,244		354
Warranties	1,792		1,699		1,631
Acquisition-related contingent consideration	6,658		3,266		266
Other	1,141		1,749		693
	$	20,665	$	20,397	$	11,782
Other liabilities:
Postretirement benefits	$	7,423	$	7,348	$	5,774
Acquisition-related contingent consideration	2,169		7,655		2,249
Deferred income taxes	3,944		4,518		102
Uncertain tax positions	5,395		4,946		4,512
	$	18,931	$	24,467	$	12,637

(5) ~~Segment Reporting~~ACQUISITIONS OF AND INVESTMENTS IN BUSINESSES AND TECHNOLOGIES

~~The~~During the first quarter of fiscal 2013, the company ~~has four business segments:~~paid $1,841 in cash to the previous Ranchview owner for an early buyout of the outstanding acquisition related contingent liability related to future Ranchview sales. This resulted in a gain of $508 during the first quarter of fiscal 2012 which is included in Applied Technology Division, Engineered Films Division, Aerostar Division and Electronic Systems Division which are defined by their common technologies, production processes and inventories. Applied Technology has precision agriculture representatives on location in key geographic areas, including Canada, Europe, Ukraine and Australia. 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. Segment information is reported consistent with the company’s management reporting structure.

~~Intersegment sales were primarily from Electronic Systems to Applied Technology. Business segment net sales and operating income results are as follows:~~

Three Months Ended Nine Months Ended
October 31,
2011 October 31,
2010 October 31,
2011
October 31,
2010
Net sales
Applied Technology $ 32,468
$ 23,913
$ 103,862
$ 77,804

Engineered Films 34,947
29,772
97,497
81,525

Aerostar 10,533
15,945
36,533
36,833

Electronic Systems 17,308
17,754
53,315
52,109

Intersegment eliminations (1,956 ) (1,561 ) (6,022 ) (4,244 )
Consolidated net sales $ 93,300
$ 85,823
$ 285,185
$ 244,027

Operating income (loss)

Applied Technology $ 10,667
$ 7,336
$ 37,859
$ 25,257

Engineered Films 5,574
6,908
(a) 14,987
16,578
(a)
Aerostar 1,807
3,606
8,053
7,115

Electronic Systems 2,293
2,297
8,012
8,234

Intersegment eliminations (16 ) —
4
(47 )
Total reportable segment income 20,325
20,147
68,915
57,137

Administrative and general expenses (3,450 ) (2,281 ) (9,833 ) (7,143 )
Consolidated operating income $ 16,875
$ 17,866
$ 59,082
$ 49,994

~~(a) Includes a $451 pre-tax gain on disposition of assets.~~

~~Table of Contents~~

~~The table below outlines the company assets by business segment:~~

October 31,
2011 January 31,
2011 October 31,
2010
Total Assets
Applied Technology $ 59,376
$ 52,669
$ 48,462

Engineered Films 60,919
46,519
47,021

Aerostar 28,045
18,140
19,800

Electronic Systems 23,814
23,385
23,982

Intersegment eliminations (182 ) (186 ) (140 )
Total reportable segments assets 171,972
140,527
139,125

Corporate and Other (b)
51,165
47,233
38,292

Consolidated assets $ 223,137
$ 187,760
$ 177,417

~~(b) Assets are principally cash, deferred taxes and other receivables.~~

~~(6) Financing Arrangements~~

~~Raven has an uncollateralized credit agreement providing a line of credit of~~ ~~$10,500~~ ~~with a maturity date of~~ ~~September 1, 2012, bearing interest at the prime rate with a minimum rate of 4.00%. Letters of credit totaling~~ ~~$1,342~~ ~~have been issued under the line, primarily to support self-insured workers compensation bonding requirements. No borrowings were outstanding as of~~ ~~October 31, 2011~~, ~~January 31, 2011~~ or ~~October 31, 2010, and~~ ~~$9,158~~ ~~was available at~~ ~~October 31, 2011~~.income.

~~(7) Dividends~~

(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)

~~The company paid a special cash dividend of $1.25 per share or $22,500 on September 30, 2010 to shareholders of record on September 15, 2010.~~(6) EMPLOYEE RETIREMENT BENEFITS

~~(8) Comprehensive Income~~

Comprehensive income consists of two components, net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, gains, and losses that under U.S. generally accepted accounting principles are recorded as an element of shareholders’ equity but are excluded from net income.

~~The components of total comprehensive income follow:~~

Three Months Ended Nine Months Ended
October 31,
2011 October 31,
2010 October 31,
2011 October 31,
2010
Net income $ 11,398
$ 11,833
$ 39,575
$ 33,131
Other comprehensive income:
Foreign currency translation (145 ) 36
15
84
Amortization of postretirement benefit plan actuarial losses, net of income tax of $11, $15, $33, and $44 21
27
62
81
Total other comprehensive income (124 ) 63
77
165
Total comprehensive income $ 11,274
$ 11,896
$ 39,652
$ 33,296

~~(9) Employee Retirement Benefits~~

The components of net periodic benefit cost for postretirement benefits are as follows:

~~Table of Contents~~


	Three Months Ended				Nine Months Ended				Three Months Ended
	October 31, 2011		October 31, 2010		October 31, 2011		October 31, 2010		April 30, 2012		April 30, 2011
Service cost	$	30	$	15	$	90	$	46	$	47	$	30
Interest cost	83		81		251		243		84		84
Amortization of actuarial losses	32		42		95		125		58		32
Net periodic benefit cost	$	145	$	138	$	436	$	414	$	189	$	146

~~(10) Product Warranty Costs~~(7) WARRANTIES

Accruals necessary for product warranties are estimated based on historical warranty costs and average time elapsed between purchases and returns for each division. Additional accruals are made for any significant, discrete warranty issues. Changes in the warranty accrual were as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
	October 31, 2011			October 31, 2010			October 31, 2011			October 31, 2010			April 30, 2012			April 30, 2011
Balance, beginning of period	$	1,642		$	1,812		$	1,437		$	1,259
Beginning balance													$	1,699		$	1,437
Accrual for warranties	763			606			2,352			2,051			820			807
Settlements made (in cash or in kind)	(1,066		)	(618		)	(2,450		)	(1,510		)	(727		)	(613		)
Balance, end of period	$	1,339		$	1,800		$	1,339		$	1,800
Ending balance													$	1,792		$	1,631

(8) FINANCING ARRANGEMENTS

Raven has an uncollateralized credit agreement providing a line of credit of $10,500 with a maturity date of September 1, 2012, bearing interest at the prime rate with a minimum rate of 4.00%. Letters of credit totaling $1,342 have been issued under the line, primarily to support self-insured workers' compensation bonding requirements. No borrowings were outstanding as of April 30, 2012, January 31, 2012 and April 30, 2011, and $9,158 was available at April 30, 2012.

(9) DIVIDENDS AND STOCK SPLIT

Dividends paid during the three months ended April 30, 2012 was $3,806 or 21 cents per share. Dividends paid during the three months ended April 30, 2011 was $3,254 or 18 cents per share.

The company announced on May 23, 2012, that the board of directors approved a quarterly cash dividend of 21 cents per share, payable July 25, 2012 to shareholders of record on July 10, 2012.

On May 23, 2012, the Board of Directors declared a two-for-one split of the company's common stock to be effected in the form of a stock dividend. The record date for the stock dividend is July 10, 2012, with the shares distributed on July 25, 2012. Per share calculations and average shares outstanding for all reported periods will be retrospectively adjusted during the second quarter of fiscal 2013.

Pro forma basic and diluted earnings per share on a post stock split basis for the three months ended April 30, 2012 would both have been $0.52 per share. Pro forma basic and diluted earnings per share on a post stock split basis for the three months ended April 30, 2011 would both have been $0.43 per share.

(10) SHARE-BASED COMPENSATION

Stock Options

The company granted 76 non-qualified stock options during the three months ended April 30, 2012. Options are granted with

(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)

exercise prices not less than market value at the date of grant. The stock options vest over a four-year period and expire after five- years. Options contain retirement and change in control provisions that may accelerate the vesting period. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The company uses historical data to estimate option exercise and employee termination within the valuation model. No stock options were granted during the three months ended April 30, 2011.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, with the following weighted average assumptions:



	Three Months Ended
	April 30, 2012
Risk-free interest rate	0.86		%
Expected dividend yield	1.33		%
Expected volatility factor	49.65		%
Expected option term (in years)	3.75

Weighted average grant date fair value	$	21.91

Restricted Stock Units

During the three months ended April 30, 2012, the company granted 11 time vested and 25 performance based restricted stock units to employees under the 2010 Stock Incentive Plan. Time vested restricted stock units will vest, if at the end of the three- year period, the employee is still with the company. The performance based restricted stock units will vest if, at the end of the three-year performance period, the company has achieved certain performance goals and the individual remains employed by the company. The exact number of performance shares to be issued will vary from 0% to 150% of the target award, depending on the company's actual performance over the three-year period in comparison to the target award goal based on return on sales (ROS). Return on sales is defined as net income divided by net sales. Dividends are earned on the restricted stock units over the vesting period.

The fair value of a time vested restricted stock unit is measured based upon the closing market price of common stock as of the date of grant. The fair value of the restricted stock units on the grant date was $63.31.

Fair value is determined for the performance share awards based upon the closing market price of common stock as of the date of grant multiplied by the number of shares granted, which is determined by an estimated ROS target over the three year performance period. The number of units issued at the vesting date will be based on actual results. The fair value of the restricted stock units on the grant date was $63.31. The estimated performance of ROS used to estimate the number of shares expected to vest is evaluated at least quarterly.

(11) ~~New Accounting Pronouncements~~SEGMENT REPORTING

In June 2011, the Financial Accounting Standards Board (FASB) issued guidance on the presentation of comprehensive income. This guidance gives an entity the option to present the total of comprehensive income, the components of net incomeThe company has four business segments: Applied Technology Division, Engineered Films Division, Aerostar Division, and Electronic Systems Division. The company's reportable segments are defined by their common technologies, production processes and inventories. These segments reflect Raven's organization into three Raven divisions and the ~~components of other comprehensive income either~~Aerostar subsidiary. Raven Canada, Raven GmbH, Raven Australia, and Raven Brazil are included in ~~a single continuous statement of comprehensive income or~~the Applied Technology Division. Vista and AIS are included in two separate but consecutive statements. In either option, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The guidance eliminates the ~~option to present the components of other comprehensive income as a part~~Aerostar Division. Substantially all of the ~~statement of changes~~company's long-lived assets are located in ~~shareholders' equity. The guidance does not change~~ the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The guidance should be applied retrospectively, and for public companies is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The company is evaluating the presentation options.United States.

~~In September 2011, FASB issued updated guidance on goodwill impairment testing. This guidance seeks to reduce~~The company measures the cost and complexity of performing the first step of the two-step goodwill impairment test. This amendment permits an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a more likely than not (more than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount. The performance of ~~the two-step impairment test becomes unnecessary if after assessing the totality of events~~its segments based on their operating income excluding administrative and ~~circumstances, the entity determines that it~~general expenses. Other income, interest expense and income taxes are not allocated to individual operating segments, and assets not identifiable to an individual segment are included as corporate assets. Segment information is ~~not more likely than not that the fair value of the reporting unit is less than its carrying amount. The amendment is effective for fiscal years beginning after December 15, 2011,~~reported consistent with ~~early adoption permitted. The company does not expect the adoption of these provisions to have a material impact on~~ the company's ~~consolidated financial statements.~~management reporting structure.

Intersegment sales were primarily from Electronic Systems to Applied Technology. Business segment net sales and operating income results are as follows:

(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)



	Three Months Ended
	April 30, 2012			April 30, 2011
Net sales
Applied Technology	$	50,480		$	39,125
Engineered Films	41,094			30,091
Aerostar	10,801			15,139
Electronic Systems	19,120			19,477
Intersegment eliminations	(3,580		)	(2,291		)
Consolidated net sales	$	117,915		$	101,541

Operating income (loss)
Applied Technology	$	20,910		$	15,074
Engineered Films	9,179			4,129
Aerostar	(1,161		)	4,062
Electronic Systems	3,695			3,412
Intersegment eliminations	(31		)	12
Total reportable segment income	32,592			26,689
Administrative and general expenses	(4,160		)	(3,156		)
Consolidated operating income	$	28,432		$	23,533

Effective June 1, 2012, the company will realign the assets and team members of its Electronic Systems Division deploying them into the company's Aerostar and Applied Technology Divisions. This repositioning is expected to better align the company's corporate structure with its mission and long-term growth strategies. Approximately 75 percent of Electronic Systems net sales will go to Aerostar and the remaining balance, after adjustments to intersegment eliminations, to Applied Technology. After the realignment, the company will continue with its core growth divisions: Applied Technology, Engineered Films and Aerostar. The company's internal reporting (chief operating decision maker reports) will be changed to reflect this realignment during the second quarter of fiscal 2013. During the quarter ending July 31, 2012, the company will retrospectively adjust its segment information for all periods presented to reflect this change in segment reporting.

#10

~~ITEM~~Item 2. ~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ~~CONDITION AND~~CONDITIONAND RESULTS OF OPERATIONS

This commentary should be read in conjunction with the company's consolidated financial statements for the ~~three and~~ ~~nine~~three months ended ~~October 31, 2011~~April 30, 2012 and ~~October 31, 2010~~April 30, 2011, 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, ~~2011~~2012.

~~EXECUTIVE OVERVIEW~~

EXECUTIVE SUMMARY

Raven ~~which began operations in 1956 as~~Industries, Inc. is an industrial manufacturer providing a ~~manufacturer~~variety of ~~high-altitude balloons, is a diversified provider of specialized~~ products ~~for~~to customers within the industrial, agricultural, energy, construction and military/aerospace ~~markets.~~

markets, primarily in North America. The company is comprised of unique operating units, classified into four reportable segments: Applied Technology, Engineered Films, Aerostar and Electronic Systems. While each segment has distinct characteristics, the products and technologies are largely extensions of durable competitive advantages rooted in the original research balloon business.

~~Applied Technology produces precision agriculture products and information management tools~~Management uses a number of metrics to reduce costs and improve farm yields. Products include field computers, application controls, GPS-guidance and assisted-steering systems, automatic boom controls, yield monitoring and planter controls and an integrated information platform.assess the company's performance:

~~Engineered Films is a leading manufacturer~~Consolidated net sales, gross margins, operating income, operating margins, net income and ~~supplier of high-quality flexible films~~earnings per share

Cash flow from operations and ~~sheeting for custom applications in energy, industrial, environmental, construction~~shareholder returns

Return on sales, assets and ~~agricultural markets throughout the United States~~equity

Segment net sales, gross profit, gross margins, operating income and abroad. Products include pit liners used in the oil and gas drilling process, high performance in-wall and under concrete slab moisture and vapor retarders, weather resistive barriers used for construction, silage covers that reduce the amount of spoilage in cattle feed and textured reinforced geomembranes.

Aerostar designs and fabricates lighter-than-air solutions (i.e. aerostats, airships, and high-altitude research balloons) for customers such as NASA and the Department of Defense and manufactures parachutes and protective wear for the U.S. military.

Electronic Systems is a total solution provider of contract electronic manufacturing services to a select base of customers in the industrial controls and instrumentation, aerospace/aviation and communication industries.

~~Seasonality~~

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.operating margins

Vision and Strategy

The company's vision is to advance its leadership positions in niche markets through the development of innovative solutions to address the needs of customers and help solve ~~global~~great challenges in the areas of hunger, safety, ~~peace~~security and ~~stability.~~energy independence.

The company's primary strategy to achieve this vision is the maintenance of a diversified ~~but integrated~~ portfolio of ~~industrial manufacturing businesses.~~businesses that share a common purpose but serve different markets providing balance, opportunity, and risk mitigation. Diversification has enabled the company to consistently generate cash, achieve profitability and maintain financial strength by limiting the impact of market disruptions and facilitating growth in both strong and weak economic cycles. Additionally, the company continues to achieve increased geographic, product and market diversification.

The company's overall approach to creating value, which is employed ~~consistently~~ across the four unique ~~operating units,~~segments, is summarized as ~~follows -~~follows:

Seek to expand in niche markets that have strong prospects for growth and above-average profit margins.

Elevate customer service by leveraging innovation, speed and dedicated engineering support to solve the customer's problem.

Reinvest cash generated from operations to fuel growth. Capital is allocated aggressively when the prospects are high for above-average, risk-adjusted returns on capital. ~~When~~If the company accumulates cash in excess of investment opportunities for above-average, risk-adjusted returns, it will be returned to ~~shareholders in the form of special dividends or stock buy backs.~~shareholders.

Continue to increase the quarterly dividend annually.

#11

Results of Operations

Consolidated financial highlights for the ~~third~~first quarter ~~and first nine months~~ of fiscal ~~2012~~2013 and fiscal ~~2011~~2012 include the following:


	Three Months Ended								Nine Months Ended									Three Months Ended
(dollars in thousands, except per-share data)	October 31, 2011			October 31, 2010			% Change		October 31, 2011			October 31, 2010				% Change		April 30, 2012			April 30, 2011			% Change
Net sales	$	93,300		$	85,823		9	%	$	285,185		$	244,027			17	%	$	117,915		$	101,541		16	%
Gross profit	27,254			24,887			10	%	88,320			72,447				22	%	41,135			32,936			25	%
Gross margins^(a)	29.2		%	29.0		%			31.0		%	29.7		%				34.9		%	32.4		%
Operating income	$	16,875		$	17,866		(6	)%	$	59,082		$	49,994			18	%	$	28,432		$	23,533		21	%
Operating margins	18.1		%	20.8		%			20.7		%	20.5		%				24.1		%	23.2		%
Net income attributable to Raven Industries, Inc.	$	11,390		$	11,833		(4	)%	$	39,567		$	33,131			19	%	$	19,043		$	15,716		21	%
Diluted earnings per share	$	0.63		$	0.65				$	2.17		$	1.83					$	1.04		$	0.86

Operating cash flow									37,729			26,288				44	%	$	28,212		$	11,008
Cash dividends									9,766			31,206			(b)	(69	)%	$	3,806		$	3,254



^(a)	The company's gross and operating margins may not be comparable to industry peers due to the diversity of its operations and variability in the classification of expenses across industries in which the company operates.
^(b)	~~Includes a special dividend of $1.25 per share or $22.5 million paid in the September 2010.~~

~~For~~Net sales and earnings trends the ~~third~~company experienced in the 2012 fiscal year continued in the 2013 fiscal first quarter, with net sales ~~increased 9%~~up 16% to ~~$93.3~~$117.9 million, from ~~$85.8~~$101.5 million in the ~~same period a year ago. The largest sales increase was reported by the Applied Technology Division, with continued sales growth in Engineered Films. Third quarter~~prior-year period. First-quarter net income ~~decreased 4%~~attributable to ~~$11.4~~Raven Industries, Inc. rose 21% to $19.0 million, or ~~$0.63~~$1.04 per diluted share, ~~compared with $11.8~~versus fiscal 2012 first-quarter net income of $15.7 million, or ~~$0.65 per share, during the same period a year ago.~~

~~Net sales for the nine months ended October 31, 2011 increased~~ ~~17%~~ ~~to $285.2 million, from $244.0 million one year earlier. Net income for the nine-month period of $39.6 million, or~~ ~~$2.17~~$0.86 per diluted ~~share,~~share.

Growth was up ~~19%~~ ~~above~~driven by the ~~prior year's nine-month results of $33.1 million, or $1.83 per share. As with the quarter,~~Engineered Films and Applied Technology ~~led~~Divisions, where double-digit sales gains were accompanied by even stronger increases in operating income. Aerostar Division operating margins were negatively impacted by lack of tethered aerostat and radar sales. Electronic Systems product mix had a favorable impact on the ~~sales and net income increases for fiscal 2012 compared to fiscal 2011.~~

~~The company reports its segment~~first quarter operating ~~income exclusive of administrative and general expenses. Other income, interest expense and income taxes are not allocated to individual operating segments.~~

margins.

Applied Technology

~~Net~~Fiscal 2013 first quarter net sales of ~~$32.5~~$50.5 million ~~in the~~ ~~third~~ ~~quarter of fiscal 2012 were up $8.6~~grew $11.3 million, or ~~36%~~ ~~year-over-year~~29%, and operating income of ~~$10.7~~$20.9 million increased ~~$3.3~~$5.9 million, or ~~45%. For the~~ ~~nine-month period, net~~39%, reflecting strong sales ~~of $103.9 million grew $26.1 million, or~~ ~~33%~~in field computers, application controls, information management and, ~~operating income of $37.9 million increased $12.6 million, or~~ ~~50%. Applied Technology benefited from healthy agricultural fundamentals, capitalizing on strong brand recognition, industry leading service~~in particular, guided steering systems that enhance farm yields and ~~greater acceptance of precision agriculture as a means of controlling input~~reduce operating costs. International sales ~~growth outpaced domestic growth~~continue to be strong for the first three ~~and nine~~ months of fiscal 2012 as compared with one year ago, increasing 95% and 69%, respectively. Profits improved for the three and nine-month periods due to higher sales volume and positive operating leverage, although the growth was tempered by continued investments in R&D and business development.2013.

Engineered Films

~~For the~~ ~~third~~Fiscal 2013 first quarter net sales of ~~$34.9~~$41.1 million ~~grew $5.2~~increased $11.0 million, or ~~17%~~ ~~as compared with the~~ ~~third~~ ~~quarter of last year. Third quarter operating income of $5.6 million declined 19% year-over-year despite higher sales. Fiscal~~ ~~2012~~ ~~year-to-date net sales of $97.5 million increased $16.0 million, or~~ ~~20%~~ and operating income of $15.0 million was down $1.6 million, decreasing 10%. For both periods, increased demand for pit liners was driven by intensified drilling for oil and natural gas. Also, film deliveries to the geomembrane market, which are used primarily for environmental and water conservation containment liners, contributed to the three and nine month sales growth. Lower year-over-year profitability for both the quarter and year-to-date periods related to margin contraction due to higher material and overhead costs relative to sales.

~~Aerostar~~

~~Fiscal 2012~~ ~~third~~ ~~quarter net sales of $10.5 million decreased $5.4 million, or~~ ~~34%~~37%, and operating income of ~~$1.8~~$9.2 million ~~decreased $1.8 million, or~~ ~~50%, compared to~~increased 122% from prior year first quarter. Continued strength in the ~~prior year. Fiscal~~ ~~2012~~ ~~year-to-date~~energy and agriculture markets, and deliveries of geomembrane films for environmental protection drove first quarter net sales growth. Higher year-over-year profitability for the quarter related to margin expansion due to improved operating efficiencies and lower material and overhead cost relative to sales.

Aerostar

Net sales in the first quarter were down 29% to $10.8 million from $15.1 million in the previous year's first quarter. Aerostar reported an operating loss of ~~$36.5~~$1.2 million, ~~decreased $0.3 million, or~~ 1% ~~and~~versus operating income of ~~$8.1~~$4.1 million ~~increased $0.9 million, or~~ ~~13%. Third quarter sales and profit results were lower due~~

~~to fluctuations in year-over-year~~a year earlier. A difficult federal spending environment impacted aerostat ~~sales and change in product mix. Year-to-date net sales and gross profit benefited from increased~~orders during the three month period. Increased sales volume of T-11 Army parachutes ~~as contract shipments were~~and protective wear could not ~~at full delivery levels until the third quarter of last year. This higher parachute sales volume~~ offset the ~~decreased~~negative impact of no tethered aerostat ~~deliveries during fiscal 2012. Higher parachute sales and the resulting profit, along with increased manufacturing efficiencies, drove year-to-date gross margins up to~~ ~~30%~~ ~~as compared to~~ ~~25%~~ ~~one year earlier, but were tempered by higher R&D and selling spending levels.~~shipments.

Electronic Systems

~~Third~~Fiscal 2013 first quarter net sales of ~~$17.3~~$19.1 million ~~as compared with $17.8~~were down slightly by $0.3 million, ~~one year earlier decreased~~ 3%~~, and operating~~or 2%. Operating income of ~~$2.3 million remained flat year-over-year. Fiscal~~ ~~2012~~ ~~nine-month net sales of $53.3~~$3.7 million increased ~~by $1.2~~from $3.4 million, or 2%~~, however, operating income of $8.0 million fell slightly by $0.2 million, or~~ 3%8%. ~~The fiscal 2012 three and nine-month results were impacted by lower aviation electronics deliveries but were mostly offset with increased~~Higher intercompany ~~sourcing~~shipments to Applied Technology ~~Division and hand-held bed control sales.~~drove the gross margin increase.

#12

RESULTS OF OPERATIONS - SEGMENT ANALYSIS

Applied Technology

Applied Technology ~~provides~~designs, manufactures, sells, and services innovative precision agriculture products and information management tools tothat help growers reduce costs and improve farm ~~yields.~~yields around the world.


	Three Months Ended										Nine Months Ended										Three Months Ended
(dollars in thousands)	October 31, 2011			October 31, 2010			$ Change		% Change		October 31, 2011			October 31, 2010			$ Change		% Change		April 30, 2012			April 30, 2011			$ Change		% Change
Net sales	$	32,468		$	23,913		$	8,555	36	%	$	103,862		$	77,804		$	26,058	33	%	$	50,480		$	39,125		$	11,355	29	%
Gross profit	15,067			10,536			4,531		43	%	50,009			35,424			14,585		41	%	26,042			18,931			7,111		38	%
Gross margins	46.4		%	44.1		%					48.1		%	45.5		%					51.6		%	48.4		%
Operating income	10,667			7,336			3,331		45	%	37,859			25,257			12,602		50	%	20,910			15,074			5,836		39	%
Operating margins	32.9		%	30.7		%					36.5		%	32.5		%					41.4		%	38.5		%

The following factors were the primary drivers of the ~~three and~~ ~~nine-month~~ year-over-year quarterly growth in net sales and operating income:

Market conditions. Global market fundamentals were healthy as population and income growth in emerging economies have increased demand for ~~food, while natural disasters and adverse weather conditions have restricted supplies.~~food. These factors have resulted in higher crop prices and wider acceptance of precision agriculture as a sound investment for maximizing yields and controlling input costs.

Sales ~~volume and selling prices.~~volume. ~~The increase in net sales was driven by higher sales volume, as selling prices reflected only a modest increase year-over-year.~~ The favorable year-over-year comparisons reflect strong sales growth across the majority of the division's product offerings, including application controls, ~~(i.e. control systems, flow meters, valves),~~ field computers, guidance and steering products, and boom controls.

International sales. ~~For the three-month period,~~Year-to-date international sales ~~almost doubled~~totaled $13.8 million, increasing 26% from ~~one~~a year ~~ago~~ago. Products delivered to South America, Eastern Europe, South Africa, and ~~represented 23%~~Canada, generated the majority of ~~total segment revenue compared to 16% in fiscal 2011 third quarter. For~~ the ~~first~~ ~~nine~~ ~~months,~~international sales ~~outside the U.S.~~growth. International sales accounted for 27% of ~~division revenue versus 21% for the first~~ ~~nine~~ ~~months of fiscal 2011. International~~total Applied Technology net sales ~~of $28.1 million~~ in the first ~~nine~~ ~~months of fiscal 2012 increased $11.4 million, or 69 % year-over-year as improved farm fundamentals drove strong overall demand in Brazil, and~~quarter compared to ~~a lesser extent, Eastern Europe, Canada, South Africa, and Australia.~~28% at this time last year.

Gross margins. Gross margins for the fiscal ~~2012 third~~2013 first quarter of ~~46.4%~~51.6% improved from ~~44.1%~~48.4% in fiscal ~~2011 third~~2012 first quarter due primarily to higher sales ~~volume. Year-over-year comparative gross margins for the nine-month periods also improved, further highlighting the effect of higher sales~~ and operating leverage on profitability. Historically, the first quarter is the seasonal high point in the division. Gross margins were also positively impacted in the first quarter of fiscal 2013 by one percentage point due to the early buyout of the Ranchview acquisition related contingent liability.

Operating expenses. ~~Third~~First quarter operating expenses of ~~13.6%~~10.2% of net sales ~~were relatively flat as a percentage~~increased slightly from prior first quarter of 9.9% of net sales ~~compared~~due to the ~~third quarter of fiscal 2011. Year-to-date operating expenses were 11.7% of~~division's continued investment in research and development expenses. R&D cost as compared to net sales in fiscal ~~2012~~2013 was 4.4% compared to ~~13.1% for~~3.8% in the prior ~~year due to growth in net sales outpacing R&D and business development expenses.~~year.

Engineered Films

Engineered Films produces ~~high-quality flexible film~~rugged reinforced plastic sheeting for ~~applications in~~industrial, energy, construction, ~~agriculture, water~~geomembrane and ~~environmental safety.~~agricultural applications.

Three Months Ended Nine Months Ended
(dollars in thousands) October 31,
2011 October 31,
2010 $ Change % Change October 31,
2011 October 31,
2010 $ Change % Change
Net sales $ 34,947
$ 29,772
$ 5,175
17 % $ 97,497
$ 81,525
$ 15,972
20 %
Gross profit 6,688
7,311
(623 ) (9 )% 18,139
18,642
(503 ) (3 )%
Gross margins 19.1 % 24.6 % 18.6 % 22.9 %
Operating income 5,574
6,908
(a) (1,334 ) (19 )% 14,987
16,578
(a) (1,591 ) (10 )%
Operating margins 15.9 % 23.2 % 15.4 % 20.3 %

~~(a) Includes a $451,000 pre-tax gain on disposition of assets.~~



	Three Months Ended
(dollars in thousands)	April 30, 2012			April 30, 2011			$ Change		% Change
Net sales	$	41,094		$	30,091		$	11,003	37	%
Gross profit	10,528			5,239			5,289		101	%
Gross margins	25.6		%	17.4		%
Operating income	9,179			4,129			5,050		122	%
Operating margins	22.3		%	13.7		%

The following factors were the primary drivers of the three ~~and nine~~ month year-over-year changes:

Market conditions. Economic growth in emerging markets continued to support higher oil and natural gas prices, and in turn, increased related drilling activity and demand for pit liners in the energy market.

Sales volume and selling prices. Sales growth for the first quarter of fiscal 2013 was predominately driven by the increased demand for pit liners utilized in oil and gas exploration activity. Environmental and water conservation projects increased the demand for geomembrane containment liners and covers during the quarter. Selling prices ~~increased approximately~~were up roughly 11% ~~for the three and nine-month periods,~~

#13

reflecting higher ~~material costs as compared with one year ago. Sales of new products also tended to increase revenues per pound shipped.~~input cost over the comparable first quarter in the prior year. Sales volume, as measured by pounds shipped, was ~~relatively flat~~up 20% for ~~the~~first quarter ~~and up 5% for the nine-month period. Sales growth for the third quarter was driven by increased geomembrane liners and covers related to a water reservoir project and higher sales of pit liners~~in fiscal 2013 as stronger demand combined with additional extrusion capacity, which went into the energy market. Year-to-date sales growth was predominately driven by pit liners sold into the energy market, increased demand for geomembrane liners and covers, and new product sales of FeedFresh™ and fumigation filmsproduction in the ~~agriculture market.~~

fourth quarter of last fiscal year.

Gross margin ~~decline.~~increase. For the three-month period, margins declined 5.5 percentage points, while year-to-date margins fell 4.3 points. Despite an increase in sales, the lower gross profit in both periods was attributable to higher resin cost and an increase in overhead costimproved 8.2% due to ~~ramping up staffing~~improved operating efficiencies, positive operating leverage and ~~other costs in anticipation~~a more favorable price versus material spread. Material cost as a percentage of sales was 60% for the ~~higher production levels that are associated~~three months ended April 2012 compared with 66% for the ~~new extrusion capacity.~~same prior year period.

Operating expenses. ~~Third~~First quarter operating expenses of $1.1 million increased 30.4% versus one year earlier, excluding the $0.5 million gain on disposition of the Ohio distribution facility in the prior year. This increased operating expenses as a percentagewere 3.3% of net sales ~~to 3.2%~~in fiscal 2013 versus ~~2.9% for~~3.7% in fiscal 2012. Selling expense increases of $0.2 million (28%) and relatively flat R&D expense lagged the previous period. Year-to-date operating expenses of $3.2 million were up 25.3% year-over-year, excluding the gain on disposition of assets. Operating expenses as a percentage of net sales increased to 3.2% compared to 3.1% for the nine-month period. The37% increase in ~~operating expenses for both the three and nine-month periods was due to higher R&D spending and increased marketing and business development costs.~~net sales.

Aerostar

Aerostar ~~provides solutions~~designs and sells tethered aerostats and radar systems for ~~scientific~~situational awareness. This division produces military parachutes, uniforms and ~~military operations, research, surveillance~~protective wear, and ~~communications using specialized fabrics~~other sewn and ~~films.~~sealed products.


	Three Months Ended											Nine Months Ended											Three Months Ended
(dollars in thousands)	October 31, 2011			October 31, 2010			$ Change			% Change		October 31, 2011			October 31, 2010			$ Change			% Change		April 30, 2012			April 30, 2011			$ Change			% Change
Net sales	$	10,533		$	15,945		$	(5,412	)	(34	)%	$	36,533		$	36,833		$	(300	)	(1	)%	$	10,801		$	15,139		$	(4,338	)	(29	)%
Gross profit	2,796			4,403			(1,607		)	(36	)%	11,016			9,221			1,795			19	%	370			5,000			(4,630		)	(93	)%
Gross margins	26.5		%	27.6		%						30.2		%	25.0		%						3.4		%	33.0		%
Operating income	1,807			3,606			(1,799		)	(50	)%	8,053			7,115			938			13	%
Operating income (loss)																							(1,161		)	4,062			(5,223		)	(129	)%
Operating margins	17.2		%	22.6		%						22.0		%	19.3		%						(10.7		)%	26.8		%

The following factors were the primary drivers of the year-over-year changes in net sales and operating ~~income for the three and nine-month periods:~~income:

Sales ~~volumes.~~volumes and Volatility in aerostat deliveries. Net sales for the ~~third~~first quarter decreased ~~$5.4~~$4.3 million, or ~~34%~~29% compared to the prior year primarily due to a ~~$5.7~~$7.3 million decrease of tethered aerostat deliveries. Aerostat sales can vary significantly from quarter-to-quarter as reflected in the three-month year-over-year comparison. ~~A relatively high level of~~The decrease in aerostat deliveries were made in last year's third quarter which resulted from shipments that had been delayed due to design changes and funding shifts in the preceding quarter. Year-to-date net sales were relatively flat, a $0.3 million decrease or 1%. Anwas partially offset by an increase in T-11 parachute ~~deliveries was offset by the decrease in tethered aerostat sales. Year-to-date T-11 parachute~~ and ~~spares revenue increased $5.6 million, or 67% as T-11 parachute~~spare part shipments and additional protective wear sales ~~increased year-over-year due to shipments made on follow-on delivery orders, in conjunction with the original order.~~($1.1 million) and Vista net sales of $2.6 million.

Gross margin changes. ~~Third~~First quarter gross margins declined from ~~27.6%~~33.0% one year ago to ~~26.5%~~3.4%. ~~Gross~~Last year's margins were favorably impacted by higher margin ~~expansion on T-11 parachutes resulted from manufacturing efficiencies and higher sales volume but was offset by a change in product mix, as~~ aerostat ~~sales carry a relatively higher margin.~~sales. Aerostat sales accounted for approximately ~~16%~~48% of net sales in the ~~third~~first quarter fiscal 2012 compared to ~~46%~~none in the ~~third~~first quarter fiscal ~~2011. Manufacturing efficiencies in T-11 parachute production drove the $1.8 million, or 5.2 point year-over-year improvement in the year-to-date~~2013. Parachute and protective wear gross ~~margin. Last year's~~ margins ~~were unfavorably impacted by T-11 parachute start-up costs. As~~percentage was consistent with the prior first quarter, ~~year-to-date margin growth was tempered by lower, high-margin aerostat sales.~~however, Vista operating losses during first quarter fiscal 2013 negatively impacted gross margins.

Operating expenses. ~~Third~~First quarter operating expenses of ~~$1.0~~$1.5 million increased to ~~9.4%~~14.2% of net sales from ~~5.0%~~6.2% in the ~~third~~first quarter of fiscal ~~2011. Year-to-date operating expenses of $3.0 million were 8.1% of net sales versus 5.7% one year earlier.~~2012. Current year operating expenses primarily reflect increased investment in research and development to support next generation aerostat ~~technology~~ and ~~the development of lighter but stronger materials, along with higher~~Vista radar technology. Higher selling and business development ~~expense to expand~~expenses were directed towards expansion of the tethered aerostat and radar business.

Electronic Systems

Electronic Systems ~~provides contract electronic~~is a total-solutions provider of electronics manufacturing services, primarily ~~for low volume/high mix industrial products.~~to North American original equipment manufacturers.


	Three Months Ended											Nine Months Ended											Three Months Ended
(dollars in thousands)	October 31, 2011			October 31, 2010			$ Change			% Change		October 31, 2011			October 31, 2010			$ Change			% Change		April 30, 2012			April 30, 2011			$ Change			% Change
Net sales	$	17,308		$	17,754		$	(446	)	(3	)%	$	53,315		$	52,109		$	1,206		2	%	$	19,120		$	19,477		$	(357	)	(2	)%
Gross profit	2,719			2,637			82			3	%	9,152			9,207			(55		)	(1	)%	4,226			3,754			472			13	%
Gross margins	15.7		%	14.9		%						17.2		%	17.7		%						22.1		%	19.3		%
Operating income	2,293			2,297			(4		)	—	%	8,012			8,234			(222		)	(3	)%	3,695			3,412			283			8	%
Operating margins	13.2		%	12.9		%						15.0		%	15.8		%						19.3		%	17.5		%

#14

The following factors were the primary drivers of the ~~three and nine-month year-over-year~~first quarter changes in net sales and operating income:

Sales volume. ~~Third~~First quarter net sales decreased 3%2% year-over-year, reflecting lower avionics volume. This was partially offset by additional sourcing of assemblies to the Applied Technology Division and increased sales of hand-held bed controls. For the nine months ended October 31, 2011, net sales were up slightly, increasing 2% from one year earlier. Increased intercompany sourcing of electronic circuit boards to Applied Technology and higher sales of hand-held bed controls more than offset the decline in avionics shipments.

Gross margins. For the quarter, ~~year-over-year~~ gross margins improved from ~~14.9%~~19.3% to ~~15.7%~~22.1% due to favorable product mix. This resulted from increased ~~sales of hand-held bed controls versus lower sales of avionics revenue. For the nine months, gross margins declined slightly, falling from 17.7% to 17.2%.~~additional sourcing for Applied Technology.

Operating expenses. ~~Third~~The increase in operating expense from first quarter ~~and year-to-date operating expenses were relatively unchanged year-over-year.~~fiscal 2013 to fiscal 2012 is due to higher selling expenses.

Corporate Expenses (administrative expenses; other income (expense), net; and income taxes)


	Three Months Ended						Nine Months Ended						Three Months Ended
(dollars in thousands)	October 31, 2011			October 31, 2010			October 31, 2011			October 31, 2010			April 30, 2012			April 30, 2011
Administrative expenses	$	3,450		$	2,281		$	9,833		$	7,143		$	4,160		$	3,156
Administrative expenses as a % of sales	3.7		%	2.7		%	3.4		%	2.9		%	3.5		%	3.1		%
Other income (expense), net	$	(4	)	$	17		$	(93	)	$	(25	)	$	(52	)	$	(13	)
Effective tax rate	32.4		%	33.8		%	32.9		%	33.7		%	33.0		%	33.2		%

Administrative expenses increased ~~year-over-year for~~during the first three ~~and nine-month periods~~months from the prior year by ~~51% and 38%, respectively. Investments~~32% due to continued investments in additional finance, human resources and information technology personnel to support current and future growth strategies through a strengthened corporate ~~infrastructure accounted for the majority of the increased spending. Higher professional services spending also contributed to the increase.~~infrastructure.

“Other income (expense), net” consists mainly of ~~interest income, foreign currency transaction gain and~~ activity related to the company's equity investment in ~~SST.~~SST, interest income, and foreign currency transaction gain. The year-over-year variability for the year-to-date expense is primarily attributable to SST results.

As compared with one year ago, the effective tax rates for the quarter and nine-month periods were favorably affected by tax benefits associated with the U.S. research and development tax credit and domestic production manufacturing credits. The research and development tax credit was not available at this time last year, but was renewed in December 2010.

OUTLOOK

Management anticipates ~~a record year of sales~~continued positive trends in Engineered Films and earnings. Net income growth exceeding the company's long-term objectives of 12 - 15% is expected. Profit is forecasted to grow at a higher rate relative to sales as a result of positive operating leverage; however, investment spending for research and development, capacity, capabilities and human capitalApplied Technology while order variability will ~~temper the overall growth rate~~likely persist in ~~the near-term. The upcoming fourth quarter is expected to show growth in all divisions and~~Aerostar going forward. For the company ~~is on pace for another record year in sales and net income.~~

overall, management believes that it can meet its long-term target of 10-15% earnings growth.

Applied Technology

~~Management~~Applied Technology expects ~~year-over-year fourth quarter sales and profit growth, although the pace of growth is expected~~ to ~~slow from recent quarterly results. Strong global demand for agriculture commodities is expected to support higher farm income and investment in agriculture equipment.~~

~~Management will~~ continue to ~~make significant~~build on its investments in ~~product development~~international growth and ~~global expansion~~integration of hardware and ~~is committed~~software solutions to ~~building on prior year investments in SST and Ranchview. The division's manufacturing facilities are in the process of being moved to a new location and any related disruptions should be short-lived.~~improve agricultural efficiency. Worldwide agriculture conditions are expected to remain healthy for this segment, with rising global demand for food, heightened environmental concerns and broadening recognition of Raven's suite of productivity tools as a cost-effective ~~investment supporting management's outlook for annual profit~~investment. These factors indicate that sales growth could continue to ~~out pace top line growth.~~be in excess of 20% in fiscal 2013. Profitability growth could be tempered by investments in new initiatives, both from a product development and geographic expansion perspective.

Engineered Films

Management ~~anticipates~~looks for sales growth ~~to be~~for fiscal 2013 in the high teens, driven by increased capacity and capabilities, and ~~market conditions, including energy and geomembrane. Crude oil prices continue~~assuming steady resin prices. Demand continues to ~~drive oil~~have a positive outlook. Oil and gas drilling activities ~~and~~drives demand for pit liners. ~~The impact of transient factors, such as civil unrest in oil-producing countries and speculation, on the price of crude oil is uncertain.~~

~~The addition of new~~New extrusion equipment ~~in the fourth quarter of fiscal 2012~~put into service is ~~expected~~ramping up according to ~~increase annual capacity by 25-30%.~~plan. This ~~equipment will improve sales opportunities by adding both~~period for new capacity and capabilities to this division. Additional depreciation and new product introduction costs will partially offset the positive impact of the higher pounds produced until new extrusion capacity is fully utilized. This ramp-up periodequipment has typically taken 2-3 years, depending on market conditions.

In addition, profit margins are highly dependent on the ratio of selling prices to input costs. The selling price of blown films is largely driven by competitive pricing pressure, capacity utilization and market dynamics, including supply and demand. Plastic resin, a derivative of natural gas and oil, is the primary component of extruded films. Management expects operating income growth to continue to exceed anticipated sales growth due to ~~an improving~~improved scrap levels, the spread of selling prices over ~~resin~~the cost of plastic resins and higher utilization of the new extrusion equipment, partially offset by ~~increased~~higher depreciation and investment spending for research ~~capacity~~ and ~~capabilities.~~product development.

Aerostar

~~Management expects fourth quarter sales~~While the addition of Vista surveillance technologies is expected to bring new innovations for detecting and ~~operating income~~tracking small objects over the land, on the water and in the air, government funding for projects related to ~~increase versus a year ago due~~surveillance continues to ~~continuing improvement of parachute margins and stronger aerostat sales. Tethered aerostat systems deployed~~be erratic. Sales growth in ~~Afghanistan have promoted the safety of U.S. troops by successfully providing continuous wide-area surveillance of insurgents. Management expects future~~fiscal 2013 does not appear likely.

New opportunities in tethered aerostats to provide ~~cost-effective~~cost effective persistent surveillance for the military ~~although orders have varied significantly~~and border security are critical to Aerostar's success. Despite strong showings by Aerostar's military parachute and high-altitude research balloon

#15

operations, Aerostar may not be profitable until the third quarter of the year. Management is pursuing opportunities to add new markets for its aerostat business, and ~~follow-on orders are dependent on~~is closely monitoring spending levels compared to anticipated sales levels, while continuing to invest in the ~~government funding process. Management also sees opportunities for growth under existing government contracts for military parachutes~~integration of Vista Research and new contracts for protective wear. The engineering knowledge and manufacturing technology gained from these relationships along with expertise in sewing and sealing specialty fabrics will help solidify Aerostar's competitive advantage.

Electronic Systems into Aerostar operations.

Electronic Systems

~~Management looks at~~Effective June 1, 2012, Electronic Systems aswill be merged into Raven's Applied Technology and Aerostar Divisions. Approximately 75 percent of Electronic Systems sales will go to Aerostar. Management recognizes that the integration of these businesses will be challenging, both from a ~~complementary business to its~~sales and an operational perspective. After the realignment, Raven Industries will continue with the company's core growth divisions: Applied Technology, Engineered Films ~~Aerostar~~ and ~~especially Applied Technology. This business carries technical expertise that supports~~Aerostar. Electronic Systems fiscal 2013 sales, before the ~~efforts of its sister~~split into the separate divisions, ~~and provides electronic manufacturing services~~are expected to ~~low-volume, high-mix customers that require high levels of service and engineering support. Management anticipates additional customers~~be as much as 10 percent lower than in fiscal 2012 ~~but believes this growth will~~as the impact of lower avionics sales may not be fully offset by ~~lower avionics sales. The mid-~~higher deliveries to ~~long-term growth strategy~~other customers. There is predicated on the development of proprietary products, expansion of the customer base and continued in-sourcing of assemblies for Raven's other divisions. Electronic Systems Division results for the fourth quarter ofalso a risk that operating income could be impacted by integration costs in fiscal ~~2012 are expected to show a solid year-over-year growth. Fourth quarter operating margins are expected to reflect improved product mix over the nine month results.~~2013.

LIQUIDITY AND CAPITAL RESOURCES

The company's balance sheet continues to reflect significant liquidity and a strong capital ~~resources are strong.~~base. Management focuses on the current cash balance and operating cash flows in considering liquidity, as operating cash flows have historically been ~~the company's~~Raven'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~~Raven's cash needs are seasonal, with working capital demands strongest in the first quarter. ~~Consequently,~~As a result, 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 ~~$44.2~~$43.5 million at ~~October 31, 2011~~,April 30, 2012, a ~~$5.6~~$17.7 million increase compared to ~~cash, cash equivalents, and short-term investments~~$25.8 million at January 31, ~~2011~~ ~~of $38.6 million.~~2012. The comparable ~~balances~~balance one year earlier totaled ~~$30.0~~$42.6 million. Increases in capital expenditures and a $12.0 million payment to acquire Vista Research, Inc., in the fourth quarter last year were offset by cash flows from operations.

Raven has an uncollateralized credit agreement that provides a ~~$14.2~~$10.5 million ~~increase.~~ line of credit, with a balance of zero at April 30, 2012. The line of credit is reduced by outstanding letters of credit totaling $1.3 million as of April 30, 2012. The credit line, which matures on September 1, 2012, is expected to be renewed during fiscal 2013.

Operating Activities

Operating cash flows result primarily from cash received from customers, which is offset ~~primarily~~ by cash payments for inventories, services, employee compensation and income taxes. Management evaluates working capital levels through the computation of average days sales outstanding ~~(“DSO”)~~ and inventory turnover. ~~DSO~~Average days sales outstanding is a measure of the company's efficiency in enforcing its credit policy. The inventory turnover ratio is a metric used to evaluate the effectiveness of inventory management, with further consideration given to balancing the disadvantages of excess inventory with the risk of delayed customer deliveries.

Cash provided by operating activities was ~~$37.7~~$28.2 million in first quarter of fiscal 2013 compared with $11.0 million in the first ~~nine~~ ~~months~~quarter of fiscal ~~2012~~ ~~versus $26.3 million in the first~~ ~~nine~~ ~~months of fiscal~~ ~~2011~~.2012. The increase in operating cash flows ~~primarily reflects~~is the result of higher company ~~earnings.~~earnings, depreciation expense, and collection of accounts receivable balances.

Inventory and accounts receivable ~~consumed $16.8~~generated $2.2 million of cash in the first ~~nine~~ ~~months~~quarter of fiscal ~~2012~~2013 versus ~~$17.0~~consumed $12.3 million ~~one year ago.~~of cash in the first quarter of fiscal 2012. The ~~company continues to focus on disciplined~~company's inventory ~~management, although the~~ turnover rate ~~has~~ declined ~~slightly~~ from ~~one~~the prior year ~~ago~~ due to higher raw material inventory levels to support ~~aerostat~~increased sales (trailing 12-month inventory ~~turnover~~turn of ~~5.4X at~~ ~~October 31, 2011~~5.2X in fiscal 2013 versus ~~5.6X at~~ ~~October 31, 2010~~)5.7X in fiscal 2012). Cash collections continue to be efficient, with the trailing ~~12-month DSO~~12 month days sales outstanding of 47 days at April 30, 2012 and 4849 days at October 31, 2011 and 2010, respectively. Year-over-year variability in operating liabilities provided an additional $2.0 million of cash due primarily to less cash consumed by accounts payable payments for the nine-month period partially offset by higher cash outflow of accrued liabilities.April 30, 2011.

Investing Activities

Cash used in investing activities totaled ~~$21.7~~$6.8 million in the first ~~nine~~ ~~months~~quarter of fiscal 2013 versus ~~2012~~$3.4 million ~~versus $7.3 million~~ in the first ~~nine~~ ~~months~~quarter of fiscal ~~2011. Capital~~2012, reflecting a $1.3 million increase in capital expenditures ~~totaled $22.1~~and $1.9 million ~~compared~~payment to ~~$9.4 million in the previous year, a 135.1% increase. Year-to-date capital spending consisted primarily of expenditures~~settle an acquisition related to increased manufacturing capacity in Engineered Films, a new manufacturing facility in Applied Technology, and Aerostar's commitment to a higher level of product development investments for future growth, including facilities and equipment.contingent liability.

Management anticipates record capital spending in fiscal ~~2012,~~2013, in the ~~$33~~$35 million ~~range, as management sees opportunities to earn attractive returns on invested capital through organic investments.~~range. In addition, management will evaluate strategic acquisitions that result in expanded capabilities and solidify competitive advantages. As part of the company's investment in corporate infrastructure, Raven will be investing approximately $15-$20 million over a 3-5 year period to renovate its downtown Sioux Falls facility headquarters. Expansion of Engineered Films capacity and Applied Technology's manufacturing and research and development facility are expected to continue.

#16

Financing Activities

Dividends of ~~$9.8~~$3.8 million or ~~$0.54~~21 cents per share were paid during the ~~first~~ ~~nine~~ ~~months of fiscal 2012~~current quarter compared to ~~$31.2~~$3.3 million or ~~$1.73~~18 cents per share ~~one~~in the year ~~ago. A special dividend of $1.25~~ago quarter. The 21 cents per share ~~or $22.5 million, was paid during~~dividend represents the ~~third quarter of fiscal 2011. In the first quarter of fiscal 2012, the company increased the quarterly dividend rate (excluding special dividends) for the 25~~company's 26^th consecutive ~~year.~~increase in the annual dividend (excluding special dividends). Raven has now paid a dividend ~~for~~in 39 consecutive years.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

There have been no material changes since the fiscal year ended January 31, ~~2011~~2012.

NEW ACCOUNTING PRONOUNCEMENTS

~~In June 2011,~~There were no new accounting standards issued or effective during the Financial Accounting Standards Board (FASB) issued guidance on the presentation of comprehensive income. This guidance gives an entity the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive incomethree months ended April 30, 2012 that had or in two separate but consecutive statements. In either option, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The guidance eliminates the option to present the components of other comprehensive income as a part of the statement of changes in shareholders' equity. The guidance does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The guidance should be applied retrospectively, and for public companies is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The company is evaluating the presentation options.

In September 2011, FASB issued updated guidance on goodwill impairment testing. This guidance seeks to reduce the cost and complexity of performing the first step of the two-step goodwill impairment test. This amendment permits an entity to first assess qualitative factors to determine whether the existence of events or circumstances leads to a more likely than not (more than 50% likelihood) that the fair value of the reporting unit is less than its carrying amount. The performance of the two-step impairment test becomes unnecessary if after assessing the totality of events and circumstances, the entity determines that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount. The amendment is effective for fiscal years beginning after December 15, 2011, with early adoption permitted. The company does not expect the adoption of these provisionsare expected to have a material impact on the company's consolidated results of operations, financial ~~statements.~~condition, or cash flows.

~~Table of Contents~~

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS~~



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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.~~debt outstanding as of April 30, 2012. 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. However, the company does utilize derivative financial instruments to manage the economic impact of fluctuation in foreign currency exchange rates on those transactions that are denominated in currency other than its functional currency, which is the U.S. dollar. The use of these financial instruments had no material effect on the ~~company’s~~company's financial condition, results of operations or cash flows.

The ~~company’s~~company's subsidiaries that operate outside the United States use their local currency as the 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 statement of income. Adjustments resulting from financial statement translations are included as cumulative translation adjustments in accumulated other comprehensive ~~loss~~income (loss) within ~~shareholders’~~shareholders' equity. 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 fluctuations had no material effect on the ~~company’s~~company's financial condition, results of operations or cash flows.

~~ITEM 4.~~



ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~October 31, 2011~~April 30, 2012, the end of the period covered by this report, management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) evaluated the effectiveness of disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) as of such date. Based on that evaluation, the CEO and CFO have concluded that the company’s disclosure controls and procedures were effective as of ~~October 31, 2011~~April 30, 2012.

Changes in Internal Control over Financial Reporting

There were no changes in the company’s internal control over financial reporting that occurred during the quarter ended ~~October 31, 2011~~April 30, 2012 that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this quarterly report on Form 10-Q are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the expectations, beliefs, intentions or strategies regarding the future. Without limiting the foregoing, the words “anticipates,” “believes,” “expects,” “intends,” “may,” “plans” and similar expressions are intended to identify forward-looking statements. The company intends that all forward-looking statements be subject to the safe harbor provisions of the Private Securities Litigation Reform Act. Although management believes that the expectations reflected in forward-looking statements are based on reasonable assumptions, there is no assurance that these assumptions are correct or that these expectations will be achieved. Assumptions involve important risks and uncertainties that could significantly affect results in the future. These risks and uncertainties include, but are not limited to, those relating to weather conditions and commodity prices, which could affect sales and profitability in some of the company’s primary markets, such as agriculture, construction, and oil and gas well drilling; or changes in competition, raw material availability, technology or relationships with the company’s largest customers—any of which could adversely affect any of the company’s product lines—as well as other risks described in the company’s 10-K under Item 1A. This list is not exhaustive, and the company does not have an obligation to revise any forward-looking statements to reflect events or circumstances after the date these statements are made.

18#17

~~Table of Contents~~

RAVEN INDUSTRIES, INC.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings:

The company is involved as a defendant in lawsuits, claims or disputes arising in the normal course of business. The settlement of such claims cannot be determined at this time. Management believes that any liability resulting from these claims will be substantially mitigated by insurance coverage. Accordingly, management does not believe the ultimate outcome of these matters will be significant to its results of operations, financial position or cash flows.

Item 1A. Risk Factors: No material change.

Item 2. Changes in Securities: None

Item 3. Defaults upon Senior Securities: None

Item 4. ~~Reserved~~Mine Safety Disclosures: None

Item 5. Other Information: None

Item 6. Exhibits Filed:



Exhibit Number			Description

3(b)			Amended and Restated Bylaws (incorporated by reference to Exhibit B of the definitive proxy statement filed April 12, 2012).

10(k)			Amended and Restated Raven Industries, Inc. 2010 Stock Incentive Plan adopted May 25, 2012 (incorporated by reference to Exhibit A of the definitive proxy statement filed April 12, 2012).

10(r)			Raven Industries Inc. Non-Qualified Stock Option agreement

10(s)			Raven Industries, Inc. Restricted Stock Unit agreement

31.1			Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act.

31.2			Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act.

32.1			Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act.

32.2			Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act.

101.INS			XBRL Instance Document

101.SCH			XBRL Taxonomy Extension Schema

101.CAL			XBRL Taxonomy Extension Calculation Linkbase

101.DEF			XBRL Taxonomy Extension Definition Linkbase

101.LAB			XBRL Taxonomy Extenstion Label Linkbase

101.PRE			XBRL Taxonomy Extension Presentation Linkbase

19#18

~~Table of Contents~~

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 and CFO, Secretary and Treasurer (Principal Financial and Accounting Officer)

Date: ~~December 2, 2011~~June 4, 2012

20#19



(in thousands, except per-share data)	October 31, 2011			January 31, 2011			October 31, 2010
ASSETS
Current Assets
Cash and cash equivalents	$	44,223		$	37,563		$	28,470
Short-term investments	—			1,000			1,500
Accounts receivable, net of allowances of $200, $300 and $299, respectively	50,661			39,967			48,733
Inventories:
Materials	33,905			30,261			26,189
In process	8,238			5,424			6,209
Finished goods	7,713			7,994			4,725
Total inventories	49,856			43,679			37,123
Deferred income taxes	2,714			2,733			2,699
Prepaid expenses and other current assets	1,867			3,239			2,996
Total current assets	149,321			128,181			121,521

Property, plant and equipment	121,988			102,080			96,063
Accumulated depreciation	(65,082		)	(60,558		)	(58,851		)
Property, plant and equipment, net	56,906			41,522			37,212
Goodwill	10,777			10,777			10,777
Amortizable intangible assets, net	1,738			1,585			1,741
Other assets, net	4,395			5,695			6,166

TOTAL ASSETS	$	223,137		$	187,760		$	177,417

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	17,568		$	16,715		$	11,343
Accrued liabilities	13,862			14,643			15,113
Taxes — accrued and withheld	2,912			1,453			2,034
Customer advances	2,356			1,524			1,105
Total current liabilities	36,698			34,335			29,595

Other liabilities	13,582			12,211			11,683
Total liabilities	50,280			46,546			41,278

Commitments and contingencies

Shareholders’ equity:
Common stock, $1 par value, authorized shares 100,000; issued 32,548, 32,511 and 32,492, respectively	32,548			32,511			32,492
Paid in capital	8,770			7,060			6,432
Retained earnings	185,911			156,125			151,613
Accumulated other comprehensive loss	(1,043		)	(1,120		)	(1,036		)
Less treasury stock, at cost, 14,449 shares	(53,362		)	(53,362		)	(53,362		)
Total Raven Industries, Inc. shareholders' equity	172,824			141,214			136,139
Noncontrolling interest	33			—			—
Total shareholders’ equity	172,857			141,214			136,139

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	223,137		$	187,760		$	177,417