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

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

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

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


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

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

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


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

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

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

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

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

contingent earn-out payments by approximately $300. The goodwill and identifiable intangible assets recorded as part of the purchase price allocation at January 31, 2020, were $4,526 and $5,700, respectively.

On September 1, 2017, the Company completed the acquisition of substantially all of the assets ("CLI Acquisition") of Colorado Lining International, Inc. (CLI), a Colorado corporation headquartered in Parker, CO. This acquisition was aligned under the Company’s Engineered Films Division. The acquisition enhanced the Company’s geomembrane market position through extended service and product offerings with the addition of new design-build and installation service components, and advanced Engineered Films’ business model into a vertically-integrated, full-service solutions provider for the geomembrane market. The CLI Acquisition constitutes a business and as such was accounted for as a business combination; however, the business combination was not significant enough to warrant pro-forma financial information.

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

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

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


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

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

As part of the AgSync Acquisition in the prior fiscal year, the Company entered into a contingent earn-out agreement, not to exceed $3,500. The earn-out is to be paid annually over three years after the purchase date, contingent upon achieving certain revenue milestones. The Company has made no payments on this potential earn-out liability as of January 31, 2020.

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

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