10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended January 31, 2009
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number: 001-07982
RAVEN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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| South Dakota
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46-0246171 |
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(IRS Employer Identification No.) |
205 E. 6th Street, P.O. Box 5107
Sioux Falls, South Dakota 57117- 5107
(Address of principal executive offices)
(605) 336-2750
(Registrant’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
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| Title of Each Class:
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Name of Each Exchange on which Registered |
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| Common Stock, $1 par value
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The NASDAQ Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
o Yes þ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
o Yes þ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, and
(2) has been subject to such filing requirements for the past ninety days. þ Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ
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 filer o |
Accelerated filer þ |
Non-accelerated filer o
(Do not check if a smaller reporting company) |
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).
o Yes þ No
The aggregate market value of the registrant’s common stock held by non-affiliates at July 31, 2008
was approximately $606,723,155. The aggregate market value was computed by reference to the closing
price as reported on the NASDAQ Global Select Market, $38.05, on July 31, 2008, which was as of the
last business day of the registrant’s most recently completed second fiscal quarter. The number of
shares outstanding on March 24, 2009 was 18,012,251.
DOCUMENTS INCORPORATED BY REFERENCE
The 2009 Annual Report to Shareholders is incorporated by reference into Parts I, II, and III to
the extent described therein. The definitive proxy statement relating to the registrant’s Annual
Meeting of Shareholders, to be held May 21, 2009, is incorporated by reference into Part III to the
extent described therein.
RAVEN INDUSTRIES, INC.
FORM 10-K
FISCAL YEAR ENDED JANUARY 31, 2009
Item 1. Business
General
Raven Industries, Inc. was incorporated in February 1956 under the laws of the State of South
Dakota and began operations later that same year. Raven is an industrial manufacturer providing a
variety of products to customers throughout North America. The company began operations as a
manufacturer of high-altitude research balloons before diversifying into the industrial,
agricultural, construction and military/aerospace markets. The company employs approximately 1,000
persons on active status and is headquartered at 205 E. Sixth Street, Sioux Falls, SD 57104 -
telephone (605) 336-2750. The company’s Internet address is http://www.ravenind.com and its
common stock trades on the NASDAQ Global Select Market under the symbol RAVN. The company has
adopted a Code of Conduct applicable to all officers, directors, and employees and which is
available on the website. Information on the company’s website is not part of this filing.
All reports (including annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K) and proxy and information statements filed with the Securities and Exchange
Commission (SEC) are available through a link from the company’s web site to the SEC web site. All
such information is available as soon as reasonably practicable after it has been electronically
filed. Filings can also be obtained free of charge by contacting the company, the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, DC 20549, through its web site at
http://www.sec.gov, or by calling the SEC at 1-800-SEC-0330.
The company has four business segments consisting of three Raven divisions and one subsidiary:
Applied Technology Division (formerly known as the Flow Controls Division), Engineered Films
Division, Electronic Systems Division, and Aerostar International, Inc. (Aerostar). Many of the
past and present product lines are an extension of technology and production methods developed in
the original balloon business. Product lines have been grouped in these segments based on common
technologies, production methods and raw materials; however, more than one business segment may
serve each of the product markets identified above. Note 11 on page 42 of the company’s Annual
Report to Shareholders, incorporated herein by reference, provides financial information concerning
the business segments.
Following is a summary of company net sales by principal product categories (dollars in thousands):
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FY 2009 |
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FY 2008 |
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FY 2007 |
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Pit lining and geomembrane films |
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40,205 |
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32,967 |
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28,715 |
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Disaster film |
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654 |
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— |
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9,880 |
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Other plastic films |
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48,999 |
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51,816 |
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52,487 |
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Agricultural precision control devices and accessories |
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99,428 |
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58,335 |
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41,855 |
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Electronics manufacturing services |
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61,983 |
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67,609 |
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66,278 |
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Parachute-related products |
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8,660 |
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2,206 |
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504 |
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Uniforms and protective wear |
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9,976 |
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5,842 |
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6,396 |
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Other |
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10,008 |
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15,182 |
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11,414 |
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Total sales |
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279,913 |
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233,957 |
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217,529 |
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Business Segments
Applied Technology
Effective February 1, 2009, the company’s Flow Controls segment changed its name to Applied
Technology. Products in this segment are electronic and Global Positioning System (GPS) devices.
They are used primarily on agricultural sprayers for precision farming applications. The company
has developed products for field location control, chemical injection and automated steering. In
February 2005, the company acquired the assets of Montgomery Industries, Inc., a privately-held
Saskatchewan, Canada company, to expand its precision agriculture product base and its
international presence.
Home office personnel sell agricultural control products to original equipment manufacturers (OEMs)
and independent third-party distributors. The segment also markets using on-site precision
agriculture representatives in key geographic areas. The company’s competitive advantage in this
segment is product reliability, ease of use, product availability and service after the sale.
2
Engineered Films
This segment produces rugged reinforced plastic sheeting for industrial, construction and
agricultural applications.
The company’s sales force sells plastic sheeting to independent third-party distributors in each of
the various markets it serves. The company extrudes a significant portion of the film converted for
its commercial products and believes it is one of the largest sheeting converters in the United
States. Engineered Films believes its ability to both extrude and convert films allows it to
provide a more customized solution to customer needs. A number of suppliers of sheeting compete
with Raven on both price and product availability. Engineered Films is the company’s most
capital-intensive business segment, requiring regular investments in new extrusion capacity along
with printers and conversion equipment. This segment’s capital expenditures were $3.1 million in
fiscal 2009, $4.0 million in fiscal 2008 and $13.3 million in fiscal 2007.
Electronic Systems
The company has focused this segment’s capabilities in electronics manufacturing services (EMS) for
commercial customers with a focus on high-mix, low-volume production. Assemblies manufactured by
the Electronic Systems segment include avionics, communication, environmental controls, and other
products where high quality is critical.
EMS sales are made in response to competitive bid requests by customers. The level and nature of
competition varies with the type of product, but the company frequently competes with a number of
EMS manufacturers on any given bid request. The markets in which the company participates are
highly competitive, with customers having many suppliers to choose from.
Aerostar
Aerostar sells high altitude aerostats for government and commercial research and military
parachutes. It produces uniforms and protective wear for US government agencies as a subcontractor
and also manufactures other sewn and sealed products on a contract basis.
Sales are made in response to competitive bid requests. High-altitude research balloons are sold
directly to government agencies (usually funded by the National Aeronautics and Space
Administration) or commercial users. Aerostar is the only balloon supplier for high-altitude
research in the United States.
Major Customer Information
Sales in fiscal 2009 and 2008 to Goodrich Corporation, a customer of the Electronic Systems
segment, accounted for 13% and 11%, respectively, of consolidated sales. At January 31, 2009,
Goodrich Corporation accounted for 18% of the company’s consolidated accounts receivable. The loss
of this account would adversely affect profitability; however, the company believes its
relationship with this customer is strong.
Seasonal Working Capital Requirements
Some seasonal demand exists in Applied Technology’s agricultural market. The Applied Technology
Division builds product in the fall for winter/spring delivery. Certain sales to agricultural
customers offer spring dating terms for fall and early winter shipments. The resulting fluctuations
in inventory and accounts receivable balances may require, and have required, seasonal short-term
financing.
Financial Instruments
The principal financial instruments the company maintains are cash, cash equivalents, short-term
investments and accounts receivable. The company manages the interest rate, credit and market
risks associated with these accounts through periodic reviews of the carrying value of assets and
liabilities and establishment of appropriate allowances in connection with the company policies.
The company does not use off-balance sheet financing, except to enter into operating leases as
described in Note 8 to the consolidated financial statements located on page 40 of the 2009 Annual
Report to Shareholders incorporated herein by reference. As discussed in Item 7A, Quantitative and
Qualitative Disclosures About Market Risk, the company uses derivative financial instruments to
manage foreign currency risk. The use of these financial instruments has had no material effect on
consolidated results of operations, financial condition, or cash flows.
3
Raw Materials
The company obtains a wide variety of materials from numerous vendors. Principal materials include
numerous electronic components for the Electronic Systems and Applied Technology segments, various
plastic resins for the Engineered Films segment and fabrics for the Aerostar segment. The
Engineered Films segment has experienced volatile resin prices over the past three years. In
fiscal 2007, because this segment has few long-term sales contracts, price increases were passed on
to customers. In fiscal 2009 and 2008, price increases could not be passed on to customers due to
weak demand and a more competitive pricing environment. With the exception of plastic resin price
volatility, the company has not experienced any significant shortages or other problems in
purchasing raw materials to date, and alternative sources of supply are generally available.
However, predicting future material shortages and the related potential impact on Raven is not
possible.
Patents
The company owns a number of patents. However, Raven does not believe that its business, as a
whole, is materially dependent on any one patent or related group of patents. It believes the
successful manufacture and sale of its products generally depend more upon its technical expertise
and manufacturing skills.
Research and Development
The business segments conduct ongoing research and development efforts. Most of the company’s
research and development expenditures are directed toward new products in the Applied Technology
segment. Total company research and development costs are disclosed in Note 1 to the Consolidated
Financial Statements located on page 37 of the 2009 Annual Report to Shareholders incorporated
herein by reference.
Environmental Matters
Except as described below, the company believes that, in all material respects, it is in compliance
with applicable federal, state and local environmental laws and regulations. Expenditures relating
to compliance for operating facilities incurred in the past have not significantly affected the
company’s capital expenditures, earnings or competitive position.
In connection with the sale of substantially all of the assets of the company’s Glasstite, Inc.
subsidiary in fiscal 2000, the company has agreed to assume responsibility for the investigation
and remediation of any pre-October 29, 1999 environmental contamination at the company’s Glasstite
pickup-truck topper facility in Dunnell, Minnesota as required by the Minnesota Pollution Control
Agency (MPCA) or the United States Environmental Protection Agency (EPA).
Also, in connection with the sale of substantially all of the assets of the company’s Plastic Tank
Division in fiscal 2001, the company has agreed to assume responsibility for the investigation and
remediation of any pre-August 28, 2000 environmental contamination at the property located at 1813
E Avenue, Sioux Falls, S.D. in accordance with the South Dakota Department of Environment and
Natural Resources (DENR).
The company and the purchasers of the company’s Glasstite subsidiary and Plastic Tank Division have
conducted environmental assessments of the properties used in these businesses. Although these
assessments continue to be evaluated by the MPCA and DENR, respectively, on the basis of the data
available, there is no reason to believe that any activities which might be required as a result of
the findings of the assessments will have a material effect on the company’s results of operations,
financial position or cash flows. The company had $88,000 accrued at January 31, 2009, its best
estimate of probable costs to be incurred related to these matters.
Backlog
As of February 1, 2009, the company’s order backlog totaled $80.4 million. Backlog amounts as of
February 1, 2008 and 2007 were $66.6 million and $44.2 million, respectively. Because the length
of time between order and shipment varies considerably by business segment and customers can change
delivery schedules or potentially cancel orders, the company does not believe that backlog, as of
any particular date, is necessarily indicative of actual net sales for any future period.
4
Employees
As of January 31, 2009, the company had approximately 1,020 employees, 1,000 in an active status.
Following is a summary of active employees by segment: Electronic Systems — 245; Applied
Technology — 375; Engineered Films — 115; Aerostar — 210; Administration — 55. Management
believes its employee relations are satisfactory.
Item 1A. Risk Factors
Forward-Looking Statements
Certain statements contained in this report 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 the company
believes that the expectations reflected in such forward-looking statements are based on reasonable
assumptions, there is no assurance that such assumptions are correct or that these expectations
will be achieved. Such 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 certain
of the company’s primary markets, such as agriculture and 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 impact any of the company’s product
lines, as well as other risks described below. The foregoing list is not exhaustive and the company
disclaims any obligation to subsequently revise any forward-looking statements to reflect events or
circumstances after the date of such statements.
Risks Relating to the Company
The company operates in markets that involve significant risks, many of which are beyond the
company’s control. Based on current information, the company believes that the following identifies
the most significant risk factors that could affect its businesses. However, the risks and
uncertainties the company faces are not limited to those discussed below. There could be other
unknown or unpredictable economic, business, competitive or regulatory factors, including factors
that the company currently believes to be immaterial, that could have material adverse effects on
the company’s financial position, liquidity, and results of operations. Past financial performance
may not be a reliable indicator of future performance and historical trends should not be used to
anticipate results or trends in future periods.
Weather conditions could affect certain of the company’s markets such as agriculture and
construction.
The company’s Applied Technology Division is largely dependent on the ability of farmers and
growers to purchase the agricultural equipment that includes its products. If such growers and
farmers experience adverse weather conditions resulting in poor growing conditions, particularly in
North America, or experience unfavorable crop prices or expenses, they may be less likely to
purchase agricultural equipment. Accordingly, poor weather conditions may adversely affect sales in
the Applied Technology Division.
Poor weather conditions can also adversely affect sales in the company’s Engineered Films Division.
To the extent weather conditions curtail construction activity, sales of the segment’s plastic
sheeting will likely decrease.
Price fluctuations in and shortages of raw materials could have a significant impact on the
company’s ability to sustain and grow earnings.
The company’s Engineered Films Division (EFD) consumes significant amounts of plastic resin, the
costs of which primarily reflect market prices for natural gas. These prices are subject to
worldwide supply and demand as well as other factors beyond the control of the company. Although
EFD is sometimes able to pass such price increases to its customers, significant variations in the
cost of plastic resins can affect the company’s operating results from period to period. Unusual
supply disruptions, such as caused by a natural disaster, could cause suppliers to invoke “force
majure” clauses in their supply agreements, causing shortages of material. Success in offsetting
higher raw material costs with price increases is largely influenced by competitive and economic
conditions and could vary significantly depending on the market served. If the company is not able
to fully offset the effects of material availability and costs, financial results could be
adversely affected.
Electronic components, used by both the Applied Technology Division and Electronic Systems
Division, are sometimes in short supply, impacting their ability to meet customer demand.
5
If a supplier of raw materials or components were unable to deliver due to shortage or financial
difficulty, any of the company’s segments could be adversely affected.
Fluctuations in commodity prices can increase our costs and decrease our sales.
Agricultural income levels are affected by agricultural commodity prices and input costs. As a
result, changes in commodity prices that reduce agricultural income levels could have a negative
effect on the ability of growers and their contractors to purchase the company’s precision
agriculture products manufactured by its Applied Technology Division.
Exploration for oil and natural gas fluctuates with their price. Plastic sheeting manufactured and
sold by our Engineered Films Division is sold as pit and pond liners to contain water used in the
drilling process. Lower prices for oil and natural gas could reduce exploration activities and
demand for our products. Plastic sheeting manufacture uses plastic resins which are subject to
change in price as the cost of natural gas changes. Accordingly, volatility in oil and natural gas
prices may negatively affect our cost of goods sold or cause us to change prices, which could
adversely affect our sales and profitability.
Failure to develop and market new technologies and products could impact the company’s competitive
position and have an adverse affect on the company’s financial results.
The company’s operating results in its Applied Technology and to a lesser extent, its Engineered
Films and Aerostar segments are largely dependent on the ability to renew the pipeline of new
products and to bring those products to market. This ability could be adversely affected by
difficulties or delays in product development such as the inability to identify viable new
products, successfully complete research and development, obtain relevant regulatory approvals,
obtain intellectual property protection, or gain market acceptance of new products and services.
Because of the lengthy development process, technological challenges and intense competition, there
can be no assurance that any of the products the company is currently developing, or could begin to
develop in the future, will achieve substantial commercial success. In addition, sales of the
company’s new products could replace sales of some of its current products, offsetting the benefit
of even a successful product introduction.
The company’s Electronic Systems Division is dependent on a small number of customers.
The company’s Electronic Systems Division (ESD) is dependent on a small number of customers with
the top customer representing over half of ESD sales. Accordingly, the ESD segment is dependent on
the continued growth, viability and financial stability of its customers, which consist of original
equipment manufacturers of avionics, consumer beds, and secure telecommunication equipment. Future
sales are dependent on the success of the company’s customers, some of which operate in businesses
associated with rapid technological change and consequent product obsolescence. Developments
adverse to major customers or their products, or the failure of a major customer to pay for
components or services, could have an adverse effect on the performance of ESD.
Further, ESD competes against many providers of electronics manufacturing services. Certain
competitors have substantially greater resources and more geographically diversified international
operations than ESD. This segment may also be at a competitive disadvantage with respect to price
when compared to manufacturers with lower cost structures, particularly those with more offshore
facilities located where labor and other costs are lower. The company also faces competition from
the manufacturing operations of current and future customers, who are continually evaluating the
merits of manufacturing products internally against the advantages of outsourcing to electronics
manufacturing services providers. Accordingly, to compete effectively, ESD must continue to provide
technologically advanced manufacturing services, maintain strict quality standards, respond
flexibly and rapidly to customers’ design and schedule changes and deliver products globally on a
reliable basis at competitive prices. Customers may cancel their orders, change production
quantities or delay production. Start-up costs and inefficiencies related to new or transferred
programs can adversely affect operating results and such costs may not be recoverable if such new
programs or transferred programs are cancelled.
The company’s Aerostar segment depends on the US government for a significant portion of its sales
creating uncertainty in the timing of and funding for projected contracts.
A significant portion of Aerostar’s sales are to the US government or US government agencies as a
prime or sub-contractor. Government spending has historically been cyclical. A decrease in US
government defense or near-space research spending or changes in spending allocation could result
in one or more of the company’s programs being reduced, delayed or terminated. Reductions in the
company’s existing programs, unless offset by other programs and opportunities, could adversely
affect its ability to sustain and grow its future sales and earnings. The company’s US government
sales are funded by the federal budget, which operates on an October-to-September fiscal year.
Changes in congressional schedules, negotiations for program funding levels or unforeseen world
events can interrupt the funding for a program or contract. Funds for multi-year contracts can be
changed in subsequent years in the appropriations process.
6
In addition, the US government has increasingly relied on indefinite delivery, indefinite quantity
(IDIQ) contracts and other procurement vehicles that are subject to a competitive bidding and
funding process even after the award of the basic contract, adding an additional element of
uncertainty to future funding levels. Delays in the funding process or changes in funding can
impact the timing of available funds or can lead to changes in program content or termination at
the government’s convenience. The loss of anticipated funding or the termination of multiple or
large programs could have an adverse effect on the company’s future sales and earnings.
The company derives a portion of its revenues from foreign markets, which subjects the company to
risk of changes in government policies and laws or worldwide economic conditions.
The company’s sales outside the US were $21 million in fiscal 2009. The company’s financial
results could be affected by changes in trade, monetary and fiscal policies, laws and regulations,
or other activities of US and non-US governments, agencies and similar organizations. These
conditions include but are not limited to changes in a country’s or region’s economic or political
conditions, trade regulations affecting production, pricing and marketing of products, local labor
conditions and regulations, reduced protection of intellectual property rights in some countries,
changes in the regulatory or legal environment, restrictions on currency exchange activities,
burdensome taxes and tariffs and other trade barriers. International risks and uncertainties,
including changing social and economic conditions as well as terrorism, political hostilities and
war, could lead to reduced sales and reduced profitability associated with such sales.
Adverse economic conditions in the major industries the company serves may materially affect
segment performance and consolidated results of operations.
The company’s results of operations are impacted by the market fundamentals of the primary
industries served. Significant declines of economic activity in the agricultural, oil and gas
exploration, construction, industrial, aerospace/aviation, communication, defense, and other major
markets served may adversely affect segment performance and consolidated results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The company maintains the following properties in connection with its operations, all of which the
company owns, unless indicated otherwise:
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Square |
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Business |
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Feet |
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Function |
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Segments |
Sioux Falls, SD
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150,000 |
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Corporate office; electronics manufacturing
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All |
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131,000 |
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Plastic sheeting manufacturing
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Engineered Films |
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73,000 |
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Warehouse
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Engineered Films |
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59,000 |
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Plastic sheeting manufacturing and sewing
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Engineered Films; Aerostar |
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35,000 |
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Warehouse and offices
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Engineered Films; Aerostar |
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27,000 |
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Training facility and manufacturing
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Applied Technology |
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25,000 |
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Inflatable manufacturing
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Aerostar |
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24,000 |
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Electronics manufacturing
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Electronic Systems |
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10,000 |
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Machine shop
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Applied Technology |
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11,000 |
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Training and product development facility
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Applied Technology |
Sulphur Springs, TX
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64,000 |
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Research balloon manufacturing
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Aerostar |
Springfield, OH
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30,000 |
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Warehouse
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Engineered Films |
Huron, SD
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24,000 |
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Sewing plant
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Aerostar |
St. Louis, MO
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24,000 |
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Electronics manufacturing
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Electronic Systems |
Madison, SD
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20,000 |
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Sewing plant
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Aerostar |
Austin, TX
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*7,000 |
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Product development facility
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Applied Technology |
Stockholm, SK
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*7,000 |
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Warehouse
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Applied Technology |
Most of the company’s manufacturing plants also serve as distribution centers and contain offices
for sales, engineering and manufacturing support staff. The company believes that its properties
are, in all material respects, in good condition and are adequate
to meet existing production needs. The company owns 6.95 acres of undeveloped land adjacent to the
other owned property in Sioux Falls, which is available for expansion.
7
Item 3. Legal Proceedings
The company is responsible for investigation and remediation of environmental contamination at two
of its sold facilities (see “Item 1, Business — Environmental Matters”). In addition, the company
is involved as a defendant in lawsuits, claims or disputes arising in the normal course of its
business. The potential costs and liability 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 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted during the fourth quarter to a vote of security holders of the
company.
Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters, and
Issuer Purchases of Equity Securities
Incorporated by reference to pages 30 (Quarterly Information), 16-17 (Eleven-year Financial
Summary), and inside back cover of the 2009 Annual Report to Shareholders.
Under a resolution from the Board of Directors dated March 15, 2008, the company was authorized to
repurchase up to $10 million of stock on the open market. No shares were repurchased during the
fourth quarter. Approximately $5.1 million of the repurchase authorization remains open, however,
the company has temporarily suspended the share repurchase program.
Item 6. Selected Financial Data
Incorporated by reference to pages 16-17 of the company’s 2009 Annual Report to Shareholders.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Incorporated by reference to pages 19-29 of the company’s 2009 Annual Report to Shareholders.
Item 7A. 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. 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 US dollar. The use of these financial instruments had no material effect on the company’s
financial condition, results of operations or cash flows.
The company’s subsidiaries that operate outside the United States use their local currency as the
functional currency. The functional currency is translated into US 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 income (loss) within shareholders’
equity. Foreign currency transaction gains or losses are recognized in the period incurred and are
included in interest income and other, net in the Consolidated Statements of Income. Foreign
currency fluctuations had no material effect on the company’s financial condition, results of
operations or cash flows.
Item 8. Financial Statements and Supplementary Data
Incorporated by reference to pages 32-43 of the company’s 2009 Annual Report to Shareholders.
8
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
As of January 31, 2009, 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 January 31, 2009.
Management’s Report on Internal Control Over Financial Reporting
The company included a report from its management concerning its internal control over financial
reporting on page 31 of its 2009 Annual Report to Shareholders, which is incorporated herein by
reference.
Changes in Internal Control Over Financial Reporting
There were no changes in the company’s internal control over financial reporting that occurred
during the fiscal quarter ended January 31, 2009, that have materially affected, or are reasonably
likely to materially affect, the company’s internal control over financial reporting.
Item 9B. Other Information
Not applicable.
Item 10. Directors, Executive Officers, and Corporate Governance
Incorporated by reference to the sections entitled “Election of Directors,” “Board of Directors and
Committees,” “Corporate Governance,” and “Other Matters” within the company’s Proxy Statement
relating to its 2009 Annual Meeting of Shareholders.
Executive Officers
| |
|
|
|
|
|
|
| Name |
|
Age |
|
Position |
Ronald M. Moquist
|
|
|
63 |
|
|
President and Chief Executive Officer |
Thomas Iacarella
|
|
|
55 |
|
|
Vice President and Chief Financial Officer |
David R. Bair
|
|
|
52 |
|
|
Division Vice President and General Manager — Electronic
Systems Division |
James D. Groninger
|
|
|
50 |
|
|
Division Vice President and General Manager — Engineered
Films Division |
Barbara K. Ohme
|
|
|
61 |
|
|
Vice President — Administration |
Daniel A. Rykhus
|
|
|
44 |
|
|
Executive Vice President |
Mark L. West
|
|
|
55 |
|
|
President — Aerostar International, Inc. |
Each of the above executive officers serves at the pleasure of the Board of Directors on a
year-to-year basis.
Mr. Moquist joined Raven in 1975 as Sales and Marketing Manager, served as the company’s Executive
Vice President from 1985 through 2000, and has been the company’s President and Chief Executive
Officer since 2000.
Mr. Iacarella joined Raven in 1991 as Corporate Controller and has been the company’s Chief
Financial Officer, Secretary and Treasurer since 1998. Prior to joining the company, he held
positions with Tonka Corporation and the accounting firm now known as Ernst & Young.
Mr. Bair joined Raven in 1999 as Division Vice President and General Manager of the Electronic
Systems Division.
Mr. Groninger joined Raven in 1986 and in 1995 became Manager of Glasstite, Inc. He has been
Division Vice President and General Manager of the Engineered Films Division since 2004.
9
Ms. Ohme joined Raven in 1987 as Employment Manager and has been the company’s Vice President of
Administration since 2004.
Mr. Rykhus joined Raven in 1990 as Director of World Class Manufacturing and has been the company’s
Executive Vice President since 2004. He was General Manager of the Applied Technology Division
from 1998 through 2009.
Mr. West joined Raven in 1982 as a Project Engineer and has been the President of Aerostar
International, Inc. since 1986.
Item 11. Executive Compensation
Incorporated by reference to the sections entitled “Executive Compensation” and “Non-management
Director Compensation” within the company’s Proxy Statement relating to its 2009 Annual Meeting of
Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters
Incorporated by reference to the section entitled “Ownership of Common Stock” within the company’s
Proxy Statement relating to its 2009 Annual Meeting of Shareholders.
The remaining information called for by this item relating to “Securities Authorized for Issuance
under Equity Compensation Plans” is incorporated by reference to Note 9 on pages 40-41 of the
company’s 2009 Annual Report to Shareholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Incorporated by reference to the sections entitled “Board of Directors and Committees” and
“Corporate Governance” contained in the company’s Proxy Statement relating to its 2009 Annual
Meeting of Shareholders.
Item 14. Principal Accounting Fees and Services
Incorporated by reference to the section entitled “Independent Registered Public Accounting Firm
Fees,” contained in the company’s Proxy Statement relating to its 2009 Annual Meeting of
Shareholders.
Item 15. Exhibits, Financial Statement Schedule
(a) Consolidated Financial Statements and Schedule
| |
1. |
|
Incorporated by reference from the attached exhibit containing the 2009 Annual
Report to Shareholders: |
| |
| |
|
|
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders’ Equity and Comprehensive Income
Consolidated Statements of Cash Flows
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm |
| |
2. |
|
Included in Part II: |
| |
| |
|
|
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule |
| |
| |
|
|
Schedule II — Valuation and Qualifying Accounts |
All other schedules are omitted because they are not applicable or not required.
10
(b) Exhibits
| |
| |
|
|
| Exhibit |
|
|
| Number |
|
Description |
| |
3(a)
|
|
Articles of Incorporation of Raven Industries, Inc. and all amendments thereto.* |
| |
3(b)
|
|
Bylaws of Raven Industries, Inc.* |
| |
3(c)
|
|
Extract of Shareholders Resolution adopted on April 7, 1962 with respect to the bylaws of Raven Industries, Inc. * |
| |
10(a)
|
|
Employment Agreement between Raven Industries, Inc. and Daniel Rykhus dated as of February 1, 2009 (incorporated
by reference to Exhibit 10.1 of the company’s Form 8-K filed February 1, 2009). † |
| |
10(b)
|
|
Employment Agreement between Raven Industries, Inc. and David R. Bair dated as of February 1, 2004. † *** |
| |
10(c)
|
|
Employment Agreement between Raven Industries, Inc. and James D. Groninger dated as of February 1, 2004. † *** |
| |
10(d)
|
|
Employment Agreement between Raven Industries, Inc. and Mark L. West dated as of February 1, 2004. † *** |
| |
10(e)
|
|
Employment Agreement between Raven Industries, Inc. and Ronald M. Moquist dated as of February 1, 2004.† ** |
| |
10(f)
|
|
Employment Agreement between Raven Industries, Inc. and Thomas Iacarella dated as of February 1, 2004. † ** |
| |
10(g)
|
|
Schedule A to Employment Agreements between Raven Industries, Inc. and each of the following Senior Executive
Officers: Ronald M. Moquist, Thomas Iacarella, and Daniel A. Rykhus (incorporated by reference to Exhibit 10.2
of the company’s Form 8-K filed February 1, 2009). † |
| |
10(h)
|
|
Employment Agreement between Raven Industries, Inc. and Barbara Ohme dated as of February 1, 2004. † ** |
| |
10(i)
|
|
Change in Control Agreement between Raven Industries, Inc. and each of the following officers and key employees: |
|
|
Ronald M. Moquist, Thomas Iacarella, Daniel A. Rykhus, David R. Bair, James D. Groninger, Barbara K. Ohme, and
Mark L. West dated as of January 31, 2008 (incorporated by reference to Exhibit 10.1 of the company’s 8-K filed
December 17, 2007). † |
| |
10(j)
|
|
Trust Agreement between Raven Industries, Inc. and Norwest Bank South Dakota, N.A. dated April 26, 1989. * |
| |
10(k)
|
|
Raven Industries, Inc. 2000 Stock Option and Compensation Plan adopted May 24, 2000 (incorporated by reference to
Exhibit A to the company’s definitive Proxy Statement filed April 19, 2000).† |
| |
10(l)
|
|
Raven Industries, Inc. Deferred Compensation Plan for Directors adopted May 23, 2007 (incorporated by reference
to Exhibit 10.1 to the company’s 8-K filed May 24, 2007).† |
| |
10(m)
|
|
Schedule A to Employment
Agreements between Raven Industries, Inc. and each of the following
Senior Managers:
David R. Bair, James D. Groninger, Barbara K. Ohme and Mark L. West. † |
| |
13
|
|
2009 Annual Report to Shareholders (only those portions specifically incorporated herein by reference shall be
deemed filed with the Commission). |
| |
21
|
|
Subsidiaries of the Registrant. |
| |
23
|
|
Consent of Independent Registered Public Accounting Firm. |
| |
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 pursuant to Section 906 of Sarbanes-Oxley Act. |
| |
32.2
|
|
Certification pursuant to Section 906 of Sarbanes-Oxley Act. |
|
|
|
| † |
|
Management contract or compensatory plan or arrangement. |
| |
| * |
|
Incorporated by reference to corresponding Exhibit Number of the company’s Form 10-K for the
year ended January 31, 1989. |
| |
| ** |
|
Incorporated by reference to corresponding Exhibit Number of the company’s Form 10-K for the
year ended January 31, 2004. |
| |
| *** |
|
Incorporated by reference to corresponding Exhibit Number of the company’s Form 10-K for the
year ended January 31, 2007. |
11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
| |
|
|
|
|
|
|
|
|
|
|
|
RAVEN INDUSTRIES, INC.
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2009
|
|
|
|
By:
|
|
/S/ Ronald M. Moquist |
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
|
|
Ronald M. Moquist
President and Chief Executive Officer
(Principal
Executive Officer and Director) |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
| |
|
|
|
|
March 31, 2009
|
|
/S/ Ronald M. Moquist |
|
|
|
|
|
|
|
Date
|
|
Ronald M. Moquist
President and Chief Executive Officer (Principal Executive
Officer and Director)
|
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Thomas Iacarella |
|
|
|
|
|
|
|
Date
|
|
Thomas Iacarella
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) |
|
|
|
|
|
|
|
Directors: |
|
|
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Conrad J. Hoigaard |
|
|
|
|
|
|
|
Date
|
|
Conrad J. Hoigaard |
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Anthony W. Bour |
|
|
|
|
|
|
|
Date
|
|
Anthony W. Bour |
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ David A. Christensen |
|
|
|
|
|
|
|
Date
|
|
David A. Christensen |
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Thomas S. Everist |
|
|
|
|
|
|
|
Date
|
|
Thomas S. Everist |
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Mark E. Griffin |
|
|
|
|
|
|
|
Date
|
|
Mark E. Griffin |
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Kevin T. Kirby |
|
|
|
|
|
|
|
Date
|
|
Kevin T. Kirby |
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Cynthia H. Milligan |
|
|
|
|
|
|
|
Date
|
|
Cynthia H. Milligan |
|
|
|
|
|
|
|
March 31, 2009
|
|
/S/ Daniel A. Rykhus |
|
|
|
|
|
|
|
Date
|
|
Daniel A. Rykhus |
|
|
12
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule
To the Board of Directors and Shareholders of Raven Industries, Inc.:
Our audits of the consolidated financial statements and of the effectiveness of internal control
over financial reporting referred to in our report dated March 24, 2009 appearing in the 2009
Annual Report to Shareholders of Raven Industries, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit
of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this
financial statement schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
March 24, 2009
13
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
for the years ended January 31, 2009, 2008 and 2007
(Dollars in thousands)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Column C |
|
|
|
|
|
|
|
| |
|
Column B |
|
|
Additions |
|
|
Column D |
|
|
|
|
| |
|
Balance at |
|
|
Charged to |
|
|
Charged to |
|
|
Deductions |
|
|
Column E |
|
| Column A |
|
Beginning |
|
|
Costs and |
|
|
Other |
|
|
From |
|
|
Balance at |
|
| Description |
|
of Year |
|
|
Expenses |
|
|
Accounts |
|
|
Reserves (1) |
|
|
End of Year |
|
Deducted in the balance sheet from
the asset to which it applies: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended January 31, 2009 |
|
$ |
293 |
|
|
$ |
629 |
|
|
None |
|
$ |
309 |
|
|
$ |
613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended January 31, 2008 |
|
$ |
258 |
|
|
$ |
91 |
|
|
None |
|
$ |
56 |
|
|
$ |
293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended January 31, 2007 |
|
$ |
257 |
|
|
$ |
40 |
|
|
None |
|
$ |
39 |
|
|
$ |
258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
| (1) |
|
Represents uncollectible accounts receivable written off during the year, net of recoveries. |
14